Preamble

The House met at Half past Two o' Clock

PRAYERS

[Mr. SPEAKER in the Chair]

MESSAGE FROM THE KING

KING ABDULLAH OF THE JORDAN

The VICE-CHAMBERLAIN OF THE HOUSE-HOLD (Mr. POPPLEWELL) reported His Majesty's Answer to the Address, as follows:

I thank you sincerely for your loyal and dutiful Address informing me of the deep sorrow and indignation with which you have learned of the assassination of H.M. King Abdullah of the Jordan.

I fully share the sentiments to which your Address gives expression and I will take care to convey to the Government of the Jordan the sense of abhorrence which, in common with myself, you feel for this detestable crime and your sympathy with the family of his late Majesty, with the Government and with the people of the Jordan.

PRIVATE BUSINESS

LONDON COUNTY COUNCIL (GENERAL POWERS) BILL

TRENT RIVER BOARD BILL

WEST RIDING COUNTY COUNCIL (GENERAL POWERS) BILL

Lords Amendments considered, and agreed to.

SWINDON CORPORATION BILL [Lords]

Read the Third time, and passed, with Amendments.

BRITISH TRANSPORT COMMISSION ORDER CONFIRMATION BILL

Read the Third time, and passed.

PETITION (AIRMET SERVICE)

Mr. G. P. Stevens: I have the honour this afternoon to present a Petition for the restoration of the Airmet weather broadcasting service. This Petition is signed by probably the smallest number of Petitioners of any Petition ever to be

presented to the House, for the total number of Petitioners is only eight. But the petitioners are learned and expert societies, who found that the Airmet service was of immense value, not only in the production of food, but in the preservation of life.
The petitioners are aware of the difficulties of congested wavebands, but they believe—and they speak with considerable knowledge—that by some re-arrangement the immediate introduction of 100 per cent. accurate weather forecasts is possible, and certainly will be possible when the selected system is that of frequency modulation.
The Petition is signed by the senior officers of the Royal Meteorological Society, the Royal Agricultural Society of England, the National Farmers' Union, the Air League of the British Empire, the British Air Line Pilots' Association, the British Gliding Association, the Institute of Navigation, and the Geographical Association.
The Petition shows that these humble petitioners regret the loss of the Airmet broadcasting service, which provided up-to-the-minute information about the weather and was of great economic and educational value.
The Petition concludes:
 Wherefore your Petitioners pray that the said Airmet broadcasting service should be restored in full at the earliest opportunity and that it should be improved to meet the special requirements of all those whose daily lives are intimately affected by the weather.
 And your Petitioners, as in duty bound, will ever pray.
To lie upon the Table.

Oral Answers to Questions — TRADE AND COMMERCE

Consumer Advisory Service

Miss Burton: asked the President of the Board of Trade if he is now in a position to give further information concerning the establishment of a consumer advice centre.

Mr. W. T. Williams: asked the President of the Board of Trade whether he will make a further statement with regard to the setting up of a consumers' council for the protection of shoppers.

The President of the Board of Trade (Sir Hartley Shawcross): I have given very careful thought to the proposal to set up a consumer advisory service, and have concluded that it would be necessary to hold a full and detailed inquiry into what should be the functions of such a service and how it could best be organised to produce effective results with due regard to economy. Such an inquiry could best take the form of a Departmental Committee.
At present, my Department is heavily engaged in matters of more immediate concern, and it would be difficult to establish a Committee which would impose further calls on the time of the people concerned. I have, however, decided to set up a Departmental Committee in due course and will do so as soon as it can conveniently be arranged, consistently with my Department's other commitments.

Miss Burton: While thanking my right hon. and learned Friend for the best answer we have had on this problem to date, may I ask if he is aware that consumers and manufacturers of reputable goods would wish such a service to be set up? Will my right hon. and learned Friend therefore try to expedite its setting up?

Sir H. Shawcross: I will bear those considerations in mind.

Sir Herbert Williams: Will the right hon. and learned Gentleman take particular care that the terms of reference make sure that the services and goods supplied by nationalised industries will come under the review of this council?

Sir H. Shawcross: I think that is a very fair question.

Cuban Cigar Imports

Mr. William Teeling: asked the President of the Board of Trade if he will make a statement on the draft treaty agreed between this country and Cuba concerning the importation of cigars into Great Britain.

Sir H. Shawcross: The negotiations have not yet reached a conclusion. The next step rests with the Government of Cuba, who have before them a draft sent to their representative on 4th July.

Mr. Teeling: First, does the right hon. and learned Gentleman realise the immense amount of damage this delay is causing in the trade, not only for the Cuban cigar people, but also for the Jamaican cigar people and the great uncertainty as to whether they can buy or sell, or what they can do? Further, if the matter is decided during the Recess, can the right hon. and learned Gentleman ensure that the association which deals with Havana cigars, and dealt with them in the past, will be allowed to deal with them in a future allocation of licences, because that will probably enable machine-made cigars to be stopped from coming into the country in favour of handmade cigars, which is what the Jamaicans wanted?

Sir H. Shawcross: I should like to see the hon. Member's second supplementary question before answering it and, when I have read it in the OFFICIAL REPORT, I will write to the hon. Member. In regard to the first, I appreciate that it is desirable to get the question settled. I had hoped that it would be settled in time to announce it to the House before the Recess. It is not any fault of the Board of Trade that this has not been done.

Utility Clothing and Footwear (Prices)

Mr. Osborne: asked the President of the Board of Trade how far the prices charged for utility clothing and footwear produced by the Co-operative Society differ from those charged for similar articles produced by private companies.

Sir H. Shawcross: I am afraid that I have no information on this subject.

Mr. Osborne: Is not the right hon. and learned Gentleman aware that the Co-op utility prices are practically the same for quality as those manufactured by private traders and, since the Co-op make no profits, is it fair to assume that high prices do not result in excessive profits?

Sir H. Shawcross: No, Sir. I am not prepared to accept either the facts or the assumptions in the hon. Member's statement without further consideration.

Mrs. Jean Mann: Is it not the case that almost every Co-operative Society gives a dividend of 2s. in the £ and does


that not represent at least 10 per cent. difference in the prices between Co-ops and private enterprise?

Sir H. Williams: Is it not true that all the Co-ops have been cutting the "divi" recently, under pressure from the Board of Trade?

Mr. Nally: Allowing for the inaccuracy in the Question—there is no such thing as "the Co-operative Society "; there are, in fact, 1,400—does my right hon. and learned Friend agree that he had on his desk yesterday morning a letter written on behalf of the whole Co-operative movement bitterly protesting against the recent action taken by his Department in allowing maximum prices to be lifted on utility goods against the will of the whole of the organised collective Co-operative movement?

Sir H. Shawcross: I can only say that to the best of my recollection no such letter was on my desk yesterday afternoon.

Mr. Osborne: asked the President of the Board of Trade what proportion of the increase on utility clothing and footwear prices is due to increased profits.

Sir H. Shawcross: In allowing increases in maximum prices for utility goods, no provision is normally made for any increase in profit margins.

Mr. Osborne: Whilst thanking the President of the Board of Trade for that fair answer, may I ask him if it is not a fact that utility prices could have been lower if the Government monopoly in wool had not made a profit of £13,500,000 in the last 12 months and the Government monopoly in cotton had not made a profit of £9,500,000 in the previous 18 months?

Sir H. Shawcross: I have no doubt that utility prices could have been lower if no one had made any profit at all, including the manufacturers of utility goods.

Mr. Wilkes: Could my right hon. and learned Friend enlighten the House by telling us why it is necessary for rayon clothing prices to go up and up, while Courtauld's rayon profits increased in 1950 over those of 1949 by no less than £94¼ million? Is it not a fact that if the prices are creeping up the profits of manufacturers and retailers are creeping up as well?

Sir H. Shawcross: No, Sir. It is not a fact. We shall have an opportunity of discussing the matter later, in the course of the day's proceedings. Large profits may well be made by firms, such as those which have been mentioned, out of their trade in goods which are not subject to price control, particularly exports. It is our desire that proper profits should be made by firms exporting goods to foreign countries. We seek, in turn, to obtain a proper proportion of profits so earned by appropriate taxation.

Mr. Osborne: Would not the President of the Board of Trade agree, in fairness to Courtauld's, that the profit they have shown recently is partly due to the new spinning company which has been in existence for nearly 10 years, but only paid a dividend last year?

Sir H. Shawcross: I can only say that as far as price control on utility goods in the Board of Trade field is concerned, while we have certain proposals for tightening up the system of price control, I do not think it would be fair to say that excessive profits have been made in that field.

Mr. R. S. Hudson: Will the right hon. and learned Gentleman take steps to see that his reply to the last supplementary question but one gets due prominence at the Labour Party Conference?

Mr. Gibson: Is not a great deal of this increase in prices of utility goods due to the increased maximum margins allowed by the Board of Trade since last March, which maximum margins, on the evidence of people employed in a big way in the distributive industries, are, in many instances, becoming minimum prices?

Mr. Nally: In view of the replies to supplementaries given by my right hon. and learned Friend, and in view of the desirability that he should be informed of what is happening in the Department, how, if his answers are accurate, does he account for the fact that there is circulating in his Department a memorandum which points out that certain Lancashire textile firms manufacturing utility and non-utility cloth are producing non-utility cloth of inferior quality and making a far greater profit on the cloth of inferior quality than the utility cloth they are producing?

Sir H. Shawcross: That may well be so; I have no control over the former cloths and it is the policy of the Government to build up the export trade of this country as high as it can be built up. I hope that the commodities are of the highest quality. It is not our policy to control profits on exports in that way although, as I have said, we get back an appropriate proportion of the profits by not insignificant taxation.

Mr. Wilkes: While agreeing, of course, with the necessity for and desirability of maintaining our export trade and, indeed, increasing it, may I ask whether it would not be wise, when requests are made to raise utility prices, to have regard to the profits that are being obtained in other fields?

Sir H. Shawcross: Unless we were to introduce an elaborate system of production control, and unless we were to allow manufacturers some profit on their utility production— and we allow them only what we believe to be a fair and reasonable profit—we would get no production in the utility field. We must have regard to the actual costings of utility production. We allow what we consider to be a fair and reasonable profit in order to ensure that utility production continues.

Mr. Dryden Brook: Has my right hon. and learned Friend seen in the last month prospectuses of two Lancashire textile firms which have shown increases of profits, in the one case from £35,000 in 1936 to £350,000 last year, and in the other case from between £40,000 and £50,000 in 1939 to over £500,000 last year? Does my right hon. and learned Friend think that those are fair profits?

Sir H. Shawcross: With respect to my hon. Friend, what he has failed to realise is that our wool and cotton textile industry is one of our principal exporting industries to dollar countries. Its exports are something of the order of £30 million in a half year. That is a very important consideration. It may well be that profits have been made out of that trade. We tax them if they are excessive.

Mr. George Thomas: But the consumer pays.

Mr. Nabarro: Save that for Scarborough.

Several Hon. Members: rose—

Mr. Speaker: I hope that we shall get through one or two more Questions before Question time finishes.

New Industries, Midlothian

Mr. Pryde: asked the President of the Board of Trade if he is aware of the need for the introduction of new industries into the Calder areas of Midlothian, where two parishes are scheduled under the Distribution of Industry Act; and what steps he proposes to take to deal with this matter.

Sir H. Shawcross: Unemployment in these areas now approximates to the average for the country as a whole, but my Department will continue to keep a close watch on the employment opportunities in the district. There are, however, many other districts in Scotland and elsewhere whose present need for additional industry is far greater.

Mr. Pryde: Is my right hon. and learned Friend aware that young women in this area of Scotland have as much as three hours added to their working day because they require to be transported into Edinburgh and other labour establishments? Is it not a fact that firms have offered to build factories in this area, and will my right hon. and learned Friend institute an inquiry into this position as it is perfectly obvious that this area has not received the due attention from his Department which it should have done?

Sir H. Shawcross: I cannot accept the implications of that question. We have given the most careful consideration to this area as to other areas where there is some degree of unemployment, but the existing circumstances of the country and the amount of capital investment I can permit for factory building does not enable me to authorise the building of new factories to shorten travelling time. The position in one of the areas to which my hon. Friend's question relates is that against an unemployment figure of 17 per cent. in July, 1938, the figure is now down to the average of the whole country—something of the order of 1 per cent.—and compares very favourably with other parts of the Scottish development area as a whole.

Mr. Pryde: In view of the nature of the reply, I desire to give notice that I shall endeavour to raise this question on the Adjournment at the earliest possible opportunity.

Cotton Trade, Lancashire (Japanese Peace Treaty)

Mr. Assheton: asked the President of the Board of Trade what steps have been taken to ensure that under the proposed treaty with Japan no damage will be done to the cotton trade in Lancashire.

Sir H. Shawcross: I would refer the right hon. Member to the Written Answer which I gave on 12th July in reply to my hon. Friend the Member for Wallsend (Mr. McKay) concerning the economic aspects of the draft Treaty of Peace with Japan.

Mr. Assheton: Since the right hon. and learned Gentleman was, unfortunately, not able to be present during part of yesterday's debate, would he be so good as to study carefully all the suggestions that were then made and see that as many amendments as possible are incorporated in the draft Treaty before the Treaty is signed at San Francisco in September?

Sir H. Shawcross: Yes, Sir. I also had the advantage only last Thursday of a very full conference in Manchester with the leaders on both sides of the cotton industry in regard to the effect of the draft Treaty of Peace with Japan, and I shall give most careful consideration to all the points which were raised there.

Mr. Nally: While recognising the agreement on all sides of the House as to the menace which Japanese competition constituted to the Lancashire textile trade before the war, may I ask my right hon. and learned Friend whether he is aware that from the early 'thirties onwards all the Co-operative societies of this country operated a complete boycott of Japanese goods? Secondly, will my right hon. and learned Friend inquire to what extent, before the war and since, firms completely under the control of private enterprise were and are most anxious to use sweated Japanese labour to make profits in the retail market of this country?

Sir H. Shawcross: We have made it quite clear that we can give no undertaking to extend most-favoured-nation treatment to Japan in future.

Mr. Emrys Roberts: Would the right hon. and learned Gentleman not agree that by far the most effective way of dealing with this problem is to try to make certain that higher labour standards are observed in Japan, and that she adheres

to all the I.L.O. conventions rather than that we should adopt purely protective devices in this country?

Sir H. Shawcross: I quite agree with the hon. Gentleman. There is attached to the draft Treaty a list of conventions to which Japan has undertaken to adhere on the Treaty being signed, among them being the one which was referred to in the debate last night, dealing with false descriptions as to the origin of goods. Japan has undertaken to adhere to that convention.

Mr. Joseph Hale: Would my right hon. and learned Friend assure us that no time will be lost by the Government in opening negotiations with the Japanese Government for a commercial treaty as well as the Treaty of Peace which we discussed in the House yesterday?

Sir H. Shawcross: That is another question, but we will certainly give it consideration.

Mr. R. S. Hudson: Will the right hon. and learned Gentleman, in order to relieve a good many anxieties that exist on this matter, endeavour to secure the inclusion in that list of conventions to which the Japanese have agreed to conform, specifically those conventions dealing with trade marks, patents, designs and copyright which they had not signed before the war?

Mr. Sydney Silverman: Will my right hon. and learned Friend bear in mind, while considering that question and all questions about the protection of Japanese labour by international conventions, that there was before the war a Washington convention on labour standards and hours of labour, which successive Governments of Tory complexion, from 1918 until 1939, refused to ratify; and will he undertake that any such international convention made now will be ratified by His Majesty's Government and enforced?

Sir H. Shawcross: We shall endeavour to learn as much as we can from the mistakes made by Governments during that period.

Crockery (Stamping)

Mr. Wood: asked the President of the Board of Trade for what purposes his regulations permit the stamping of crockery with distinctive initials.

Sir H. Shawcross: The stamping of crockery with distinctive initials is not generally permitted, but licences issued under the Domestic and Ornamental Pottery (Manufacture, Marking and Supply) Order, 1950, permit it for crockery for the services run by British Railways and for canteens run by the Port of London Authority, since the pilferage risks are so great in these cases that it is doubtful whether the canteen services could be carried on if marking were not permitted.
I am considering allowing certain hotels which cater largely for overseas tourists to have some crockery distinctively marked with a name or badge, but I should emphasise that any general relaxation of this prohibition would not be possible without reducing total production and exports.

Mr. Wood: Will the right hon. and learned Gentleman consider extending the relaxation of this control a little further, because there are plenty of opportunities to pilfer from the kind of institute which I mentioned in my Question about a fortnight ago—the Church Institute—and there appears to be rather unfair discrimination between a large body and a small one?

Sir H. Shawcross: I am very anxious to reduce these exemptions to an absolute minimum and not to create, in favour of one organisation or class of organisations, a precedent which might allow others to come in. Any exemption of this kind has an effect on the production of an industry on whose manufactures we shall rely increasingly largely in our export trade.

Sir H. Williams: If the right hon. and learned Gentleman goes to Stoke-on-Trent and buys some crockery, is there any reason why he should not have "H.S." put on it?

Sir H. Shawcross: Every reason, if it interferes in the slightest degree with our export drive.

Mr. Henry Strauss: Is the right hon. and learned Gentleman confident that distinctive markings will not add to the value of the things as souvenirs?

Tar Imports

Mr. Geoffrey Cooper: asked the President of the Board of Trade what is the quantity and value of tar, used for

refining in this country for the extraction of oils and other chemical contents, imported from hard-currency and soft-currency areas, respectively, in each of the last five years.

Sir H. Shawcross: So far as I am aware, there have been no imports of tar for the extraction of oils and other chemicals, except from the Channel Islands, the details of which I am circulating in the OFFICIAL REPORT.

Mr. Cooper: Whilst appreciating that there is not apparently a great import of this material, may I ask my right hon. and learned Friend whether he does not realise that additional supplies of tar and tar acids would be available if we carbonised a larger quantity of the coal at present used for domestic purposes? There are some 40 million tons annually used for domestic purposes, and if that were done, it would not only supply us with smokeless fuel but with the raw materials from which oil could be produced—

Mr. Speaker: These long supplementaries are really making a farce of Question Time.

Mr. Cooper: Does the President of the Board of Trade realise that we could reduce by a quarter the importation of fuel oil and motor spirit if we treated this coal by carbonisation? May I have a reply?

Following are the details:


IMPORTS INTO THE UNITED KINGDOM OF COAL TAR FROM THE CHANNEL ISLANDS


Year

Tons
Value





£


1947
…
1,735
3,214


1948
…
1,689
2,334


1949
…
2,854
3,483


1950
…
2,768
3,341


1951(Jan.-May)
…
484
570

Indian and Nyasaland Tobacco (Imports)

Mr. Russell: asked the President of the Board of Trade why there was a heavy reduction in the quantities of un-manufactured tobacco imported from India and from Nyasaland in the first six months of 1951 compared with the corresponding period of 1950.

Sir H. Shawcross: Since traders are free to import from these countries as much tobacco as they choose, I assume they are satisfied that the quantities are sufficient for their requirements.

Mr. Russell: Is it not a fact that all imports have to be under licence, even though the imports are made by private traders? Is it certain that no licences to import from these countries are being refused?

Sir H. Shawcross: Yes, Sir.

War Damage Claims

Mr. Nabarro: asked the President of the Board of Trade the number of claims under the War Damage Act Insurance Scheme, Part II, Business Scheme and Private Chattels, which remain unpaid at the latest convenient date; whether all such claims have now been assessed; what is the total value of the assessments made in respect of such unpaid claims; and whether, in view of many cases of individual hardship, he is taking steps to secure early payment of all such claims.

Sir H. Shawcross: On 30th June, 1951, there remained unpaid, in whole or in part, 34,767 claims under the Business Scheme. Of these 34,217 have been assessed for an aggregate amount of £35,960,000 which remains deferred. The remaining 550 claims are for the most part belated claims. All claims under the Private Chattels Scheme except a few belated claims have been assessed and paid.
Any cases of individual hardship which are referred to my Department are sympathetically dealt with but, as regards the general payment of deferred claims, I can only say that the Treasury have not yet made the regulations which would permit general payments to be made under the Business Scheme.

Mrs. Middleton: Can my right hon. and learned Friend say how many claims have been made under the hardship scheme and what proportion have been rejected?

Sir H. Shawcross: No, Sir. I cannot answer that question without notice.

Sir H. Williams: As one who happens to be a director of an insurance company, may I ask what the right hon. and learned

Gentleman would do with an insurance company which defaulted in this appalling way?

Oral Answers to Questions — RADIO AND TELEVISION SETS (SAFETY PRECAUTIONS)

Lieut.-Colonel Lipton: asked the Secretary of State for the Home Department whether he will report the result of his consultation with the manufacturers of radio and television sets for revising the present safety precautions.

Mr. Janner: asked the Secretary of State for the Home Department whether he is aware that some television sets have caused serious accidents in Leicester and elsewhere; and what consultations he has had with manufacturers of television sets with a view to improving present safety precautions.

The Secretary of State for the Home Department (Mr. Ede): I understand that a new British Standards specification for television sets, which includes revised safety precautions drawn up in the light of recent experience, is nearing completion and will be published as soon as possible. The risk of fire and shock from electrical appliances is one of the matters which has engaged the attention of the inter-Departmental Committee on Accidents in the Home, and consultations have taken place and will continue to take place with manufacturers in regard to safety precautions.

Lieut.-Colonel Lipton: Does that answer mean that my right hon. Friend has received, or will receive, an assurance from the radio manufacturers that the risk of electrocution has been avoided or minimised?

Mr. Ede: The number of cases of electrocution that have occurred is surprisingly small. With regard to television I think that the number is still below double figures. Every effort is being made to improve matters.

Mr. Speaker: Earl Winterton.

Earl Winterton: To prevent this Parliament achieving a new low record in the number of Questions answered, I should like to request that the answers to Questions Nos. 18. 19 and 20 be circulated in the OFFICIAL REPORT. It is absolutely scandalous—16 Questions in 35 minutes.

Oral Answers to Questions — PRISONS AND BORSTAL INSTITUTIONS

Punishments

Mr. James Johnson: asked the Secretary of State for the Home Department what action he contemplates taking, following the publication of the Report of the Franklin Committee on Punishment in Borstal Institutions.

Sir Ian Fraser: asked the Secretary of State for the Home Department whether he has now considered the Report of the Franklin Committee on Punishment in Prisons and Borstal Institutions; and whether he will make a statement on the action he proposes to take on its recommendations.

Mr. Ede: As the answer is rather long I will, with permission, make a statement at the end of Questions.

Mr. Johnson: Is my right hon. Friend aware that many teachers of experience, both in normal schools and special schools, think that many of these young men are being mollycoddled, and will he bear this in mind when he makes his final summing up?

Mr. Ede: I think that my hon. Friend will find that that point is dealt with in the statement that I shall make.

Visiting Hours

Mr. Vaughan-Morgan: asked the Secretary of State for the Home Department why visitors to His Majesty's Boys' Prison, Wormwood Scrubs, are allowed only between the hours of 1.30 p.m. and 3.30 p.m.; why no visitors are allowed on Sundays; and why visits on Saturdays are liable to be curtailed.

Mr. Ede: The prison rules provide that visits to a prisoner shall not, except in a case of emergency, take place on a Sunday. The visiting hours on other days of the week are governed by administrative convenience. The number of visitors at Wormwood Scrubs on a Saturday is very great and visits have had on occasion to be curtailed in consequence, though this is avoided if possible.

Mr. Vaughan-Morgan: Could the right hon. Gentleman review the whole matter, because, in a case of which I am thinking, the parents of the boy live a long way from London and the father has to give

up a day's work in order to see his boy during the week? Is it not of the greatest importance that boys awaiting long sentences in Borstal should, as long as possible, be kept in touch with family life?

Mr. Ede: I agree with all the hon. Gentleman says about the desirability of these visits, but, with the present shortage of prison staff, these matters are very difficult to arrange. I will see that every humane consideration is given to this matter.

Mr. James Hudson: As there are crowds of visitors on Saturdays, as my right hon. Friend has admitted, is there not a good case for opening on Sunday, which would be a particularly convenient day?

Mr. S. Silverman: Will my right hon. Friend bear in mind that the congestion on Saturday afternoons is due mainly to the fact that very few working-class people can pay a visit to a prison between 1.30 and 3.30 p.m.? Could he not give consideration to providing some suitable hours on ordinary weekdays?

Mr. Ede: That, again, is mainly governed by the shortage of staff.

Mr. Vaughan-Morgan: As the staff have to be there anyway, presumably, because the place does not shut down for the week-end, could not consideration be given to that matter, since even the Tower of London is now open on Sunday?

Water Supply, Sudbury

Mr. Wakefield: asked the Secretary of State for the Home Department what complaints he has received about the quality of the water supplied to His Majesty's Prison at Sudbury; and what remedial action he proposes to take.

Mr. Ede: When the camp at Sudbury Park was taken over as a prison the source of the water supply was the River Dove, and dissatisfaction was expressed by the staff over the taste of the water. The trouble has now been removed by connecting the prison's water supply to the mains and disconnecting the old source of supply.

Mr. Wakefield: Would the right hon. Gentleman make inquiries whether the staff and inmates of the prison are now satisfied?

Mr. Ede: I have been making inquiries, and I am assured that the staff are now satisfied.

Curative Treatment

Lieut.-Colonel Lipton: asked the Secretary of State for the Home Department whether his attention has been drawn to a recent case, details of which have been sent to him, in which a sentence of 10 years' imprisonment was imposed on charges of improper assault: and what curative medical treatment is provided in this and similar cases during the period of sentence.

Mr. Ede: The prisoner has already been examined to see whether treatment would be appropriate, but further examination will be necessary before a decision can be reached. All such prisoners are examined by prison medical officers, who are experienced in psychiatry, and whenever the prisoner is willing to undergo treatment and is likely to profit by it, he receives it.

Lieut.-Colonel Lipton: In view of the very alarming increase in the number of these cases in recent years, will my right hon. Friend devote his attention to the report prepared by the British Medical Association and the Magistrates' Association, which shows that punishment without treatment was a greater danger to the community than to the offenders themselves?

Mr. Ede: I do not think my hon. and gallant Friend should exaggerate the increase in this class of offence in recent years. Co-operation between the psychiatrists or other persons employed and the person concerned is necessary if success is to be achieved, and not all persons provide this co-operation.

Mr. Godfrey Nicholson: Is the right hon. Gentleman aware that there are some people who commit offences like indecent exposure who are not actually certifiable but are clearly epileptic and not responsible for their actions; and that because there is a gap in the arrangements these persons are in and out of prison and nothing is done to stop it?

Mr. Ede: Wherever it is possible to help a person by treatment, that treatment is afforded him.

Mr. Joynson-Hicks: Can the right hon. Gentleman assure the House that, in the event of the treatment not being successful, the public will be protected against these people on their release from prison?

Mr. Ede: When a person is released from prison, I cannot then be responsible for him, but of course, in some cases, they are recommended to enter institutions.

Mr. Maudling: Will the right hon. Gentleman do something about the Section of the Criminal Justice Act which, in certain cases, compels magistrates to send offenders to prison when they would rather send them for treatment?

Mr. Ede: I do not think that that is an accurate statement.

Preventive Detention

Mr. S. Silverman: asked the Secretary of State for the Home Department whether he has considered the case of Rexv. Sedgwick, reported in Volume 34 of the Criminal Appeal Reports, in which the Lord Chief Justice prescribes that in cases of preventive detention the minimum sentence shall be seven years, except in the case of old men who might otherwise die in prison, whereas Section 21 of the Criminal Justice Act, 1948, prescribes that such minimum period shall be five years; and whether he will introduce amending legislation so as to give effect to the views of the Lord Chief Justice.

Mr. Ede: Amending legislation is not required to enable courts in the exercise of their discretion to give effect to the views expressed by the Lord Chief Justice in the Court of Criminal Appeal.

Mr. Silverman: Will my right hon. Friend confirm that until there is such amending legislation the maximum period prescribed by the law, as passed by Parliament, is five years and not seven, and, further, that courts of competent jurisdiction, despite the Lord Chief Justice's dictum in the reported case, are quite entitled, in a proper case, to pass sentences of five or six years?

Mr. Ede: The courts are bound in their discretion by the laws passed by Parliament.

Maintenance Orders (Non-Compliance)

Miss Irene Ward: asked the Secretary of State for the Home Department how many of the 3,544 men committed to prison by courts of summary jurisdiction in 1950 for non-compliance with maintenance orders actually served a prison sentence; and how many paid the money required by the courts in lieu of imprisonment before the time for such payment expired.

Mr. Ede: Three thousand five hundred and forty-four men were committed to prison in 1950 for failing to pay maintenance to their wives. This was the number received into prison, but without scrutiny of personal files at the prisons it would not be possible to say for how long they were detained in prison and how many paid during their imprisonment the whole or part of the arrears of maintenance owed by them.

Miss Ward: Is the right hon. Gentleman aware that it would be very helpful to those interested in this matter if the figure could be broken down and if, without going back to past records, we could have records in the future?

Mr. Ede: I think that that would be a case of keeping statistics for statistics' sake.

Oral Answers to Questions — CIVIL DEFENCE

Helicopters

Mr. Reader Harris: asked the Secretary of State for the Home Department if he will consider the provision of helicopters for Civil Defence forces in time of war.

The Under-Secretary of State for the Home Department (Mr. Geoffrey de Freitas): The provision of light aircraft (including helicopters) for Civil Defence in time of war is already under consideration. Helicopters may well play a useful part in Civil Defence and we are taking this fact into account in planning.

Mr. Harris: Can the hon. Gentleman say how soon training will commence for the Civil Defence personnel?

Mr. de Freitas: We are a long way from that; we are working out the general principles first.

Mr. Profumo: When the hon. Gentleman says that the matter has been taken into consideration, can he tell the House whether any indication has been given to the aircraft industry that these aeroplanes may be needed? Have any firm orders, or tentative orders, been placed?

Mr. de Freitas: I cannot say. We are in consultation with the flying Departments. After that stage, they will let the industry know.

Brigadier Prior-Palmer: Does not the hon. Gentleman think that the matter of communications could be dealt with far more easily and efficiently by radio rather than by helicopter?

Mr. de Freita: This is not only a question of sending a message. One cannot send an important man by radio.

Major Legge-Bourke: Would the hon. Gentleman say whether priorities have yet been decided as between providing helicopters for ambulance service with the Forces and providing them for Civil Defence purposes?

Mr. de Freita: We have not got as far as that.

Strength

Mr. Key: asked the Secretary of State for the Home Department what was the strength, of the Civil Defence Corps and of the Auxiliary Fire Service in England and Wales on 30th June.

Mr. de Freitas: It was 147,000 and 10,300, respectively. I will circulate the detailed figures in HANSARD.

Lieut.-Colonel Lipton: Can my right hon. Friend say what section of the Civil Defence Corps shows the best recruiting figures?

Mr. de Freitas: On the regional side, I do not know; in the functional sections, the ambulance section.

Tactical School

Mr. Key: asked the Secretary of State for the Home Department what will be the functions of the proposed new Civil Defence Tactical School.

Mr. de Freitas: The Tactical School will fill the gap between the three Technical Training Schools and the Civil Defence Staff College, where the higher direction of Civil Defence is studied by


senior officers. It will provide courses in tactical and operational subjects for intermediate grades of officers of the various Civil Defence services.

Mr. Nicholson: Will the hon. Gentleman tell us what is the cost per pupil per week?

Mr. de Freitas: I will look into that, but I may say something about it on the next question.

Mr. Key: asked the Secretary of State for the Home Department where and when the Civil Defence Tactical School will be established; how long the average course will be; and how many students will be accommodated at any one time.

Mr. de Freitas: Construction of the Tactical School to accommodate 50 students has just been started in the grounds of the Civil Defence Staff College at Sunningdale Park. I hope that courses will begin next year. The syllabus and length of the course are now being considered.

Brigadier Prior-Palmer: Can the hon. Gentleman say what sort of ranks will be eligible to go to this school, as far as Civil Defence and the Fire Service are concerned?

Mr. de Freitas: The grades we have in mind are those of chief warden, inspector of police and divisional officer of the fire service.

Mr. Nicholson: May I now have an answer to my earlier supplementary question?

Mr. de Freitas: I will consider it. One reason for the school being built in the grounds of the Staff College is that they will be able to share some accommodation between the commandants and thus reduce the overheads.

Training Manuals

Rev. Llywelyn Williams: asked the Secretary of State for the Home Department what Civil Defence training manuals are now available; and when they were issued to Civil Defence Corps authorities.

Mr. de Freitas: With my hon. Friend's permission, as the answer is long, I will circulate it in the OFFICIAL REPORT.

Rev. L. Williams: Will these manuals be available for the general public as well?

Mr. de Freitas: All except one, which is restricted, can be bought at newsagents or at the Stationery Office.

Following is the answer:

The Civil Defence training publications available to Civil Defence Corps authorities and the dates on which they were issued are as follows:

Manual of Basic Training (Volume 1)—(Organisation, General Training and War Duties)

Pamphlet No. 1 Ambulance Section—Issued 25th January, 1951.

Pamphlet No. 2 Welfare Section—Issued 6th July, 1951.

Pamphlet No. 3 Warden Section—Issued 15th June, 1951.

Manual of Basic Training (Volume II)—
(Technical Information)

Pamphlet No. 1 Basic Chemical Warfare—Issued 16th August, 1949.

Pamphlet No. 2 Basic Fire Fighting—Issued 16th August, 1949.

Pamphlet No. 3 Basic First Aid—Issued 16th August, 1949.

Pamphlet No. 4 Basic Rescue—Issued 8th February, 1950.

Pamphlet No. 5 Basic Methods of Protection against High Explosive Missiles—Issued 23rd February, 1950.

Pamphlet No. 6 Atomic Warfare—Issued 26th July, 1950.

First Aid Manual—Issued30th January, 1951.

Training Memoranda

No. 1 Training Plan—Issued 23rd November, 1949.

No. 2 Initial Training of Volunteers—Issued 23rd November, 1949.

No. 2a initial Training of Volunteers (Full Rescue and Full First Aid Syllabuses)—Issued 15th July, 1950.

*No. 4 Aircraft Weapons and Trend of Development—Issued 26th July, 1950.

No. 5 Further Training of Volunteers and Notes for Heads of Sections Leaders and Instructors—Issued 8th May, 1951.

*Restricted—obtainable from H.M.S.O. only on written application by clerk to a local authority, chief constable or chief officer of a fire brigade.

A.F.S. Training

Rev. L. Williams: asked the Secretary of State for the Home Department whether arrangements are being made for men and women in the Auxiliary Fire Service to take part in fire-fighting exercises outside their home districts.

Mr. de Freitas: The fire authorities are responsible for training the Auxiliary Fire


Service and one or two of them have held exercises designed to train men and women in the A.F.S. in reinforcing moves. Last Sunday my right hon. Friend the Home Secretary attended an exercise in Portsmouth Dockyard which had been arranged by the London, West Sussex and Portsmouth authorities with the cooperation of the Admiralty, and in which 120 men and women of the London Auxiliary Fire Service took part.

Oral Answers to Questions — STOWAWAYS

Mr. Thomas Reid: asked the Secretary of State for the Home Department how many stowaways have come to Britain since 1945; how many of these have come from Colonial or Dependency Territories; and how many have been repatriated.

Mr. Ede: The number in question is 4,513, of whom 2,618 were British or so represented themselves and 1,895 were aliens. Of the British, since 1st January, 1949, 934 out of 1,104 came from the Colonies or Dependencies; of these, 196 were turned away because they failed to establish their British nationality, and a few others were later repatriated. These figures are a close approximation and comparable figures are not available for the period before 1st January, 1949. Similarly, of 371 alien stowaways since January, 1950, all, except 17, principally refugees from Poland, were turned away.

Oral Answers to Questions — POLISH SHIP'S CREW (ASYLUM)

Miss Ward: asked the Secretary of State for the Home Department what action he is proposing to take, having regard to the need to protect the security of this country, with regard to the 12 members of the crew of the Polish ship "Batory," now in the Tyne, who are asking for asylum in this country as refugees from the Union of Soviet Socialist Republics.

Mr. Ede: The men in question, eight in number, did not return to their ship before she left the Tyne on 3rd July. They subsequently gave themselves up to the police, and were detained in custody while security checks wehe carried out. These checks disclosed nothing of interest, and since it was clear that the men would incur

drastic punishment if they were required to return to Poland, I have decided to allow them to remain in this country.

Oral Answers to Questions — OFFICE WORKERS (COMMITTEE'S REPORT)

Mr. Mulley: asked the Secretary of State for the Home Department what progress has been made towards the implementation of the recommendations of the Gowers Committee on the Health, Safety and Welfare of Office Workers; and if he will make a statement.

Mr. Ede: Substantial progress has been made in considering the Committee's recommendations on this subject, and I hope to be able to begin discussion with the interests concerned by the end of the year.

Mr. Mulley: While I appreciate my right hon. Friend's difficulties in preparing legislation in this field, may I ask if he realises that it is two years since the Committee reported, and that the patience of these people is becoming exhausted? Can he not give us an assurance that he will introduce legislation early in the next Session?

Mr. Ede: I am pressing on with it as fast as I can.

Oral Answers to Questions — MRS. M. JOHNSON, SOUTH SHIELDS (FINE REMISSION)

Mr. J. Enoch Powell: asked the Secretary of State for the Home Department when and how the decision to remit part of the fine imposed on Mrs. M. Johnson of South Shields was first published by him.

Mr. Ede: The decision was communicated in accordance with the usual practice to the clerk to the justices by letter dated 26th June and the warrant of remission was sent on 14th July.

Mr. Powell: Does not the Home Secretary think that it is rather odd that the first knowledge of this decision was communicated to the Press by his constituency agent?

Mr. Ede: No, Sir; I do not. I was in South Shields on 14th and 15th July, and I made arrangements that a proper communication should be made to them on the 16th.

Oral Answers to Questions — PARKING, WESTMINSTER

Sir H. Williams: asked the Secretary of State for the Home Department if be will publish the terms of the exemption granted to the London Transport Executive which authorised the parking of omnibuses in Tothill Street on 11th July.

Mr. Ede: The authority granted to the London Transport Executive on this occasion was for five coaches to take up at 10.30 a.m., eight at noon, seven at 12.30 p.m. and eight at 1 p.m. Owing to a delay in the arrival of members of the conference who were due to be taken up at noon, some overlap of vehicles occurred between the noon and 12.30 p.m. groups, but otherwise little difficulty arose.

Sir H. Williams: Having regard to the fact that these omnibuses caused a great deal more congestion in Tothill Street on that occasion than did my small car on another day, for which I was fined at Bow Street, is it not high time that this nonsense was stopped?

Oral Answers to Questions — BRITISH SUBJECTS (EXIT FROM U.K.)

Mr. Eric Fletcher: asked the Secretary of State for the Home Department under what authority and in what circumstances directions are given by his Department to prevent British subjects from leaving the country.

Mr. Ede: No such directions have been given since the lapse of the wartime Defence Regulation 18.

Mr. Fletcher: Would the Home Secretary confirm that the mere failure to hold a British passport will not in itself prevent a British subject from leaving this country?

Mr. Ede: Failure to own or present a passport, if the person is a British subject, does not prevent him leaving the country.

Oral Answers to Questions — ELECTION EXPENSES

Mr. Nabarro: asked the Secretary of State for the Home Department whether he is aware that paper, board and similar materials have increased in cost by 100 per cent. or more, since the February, 1950, General Election and

printing 25 per cent., or more, and that the average costs of these materials and services in an average constituency of 56,000 electors, was in excess of £300 at that election; and whether, in view of these rises in the cost of essential election services he will introduce legislation to sanction a commensurate increase in the maxima permitted current election expenses, respectively £450 plus 2d. per elector in a county constituency, and £450 plus 1½d. per elector in a borough constituency, for all future Parliamentary elections and by-elections.

Mr. Ede: I would refer the hon. Member to the answer which I gave to the hon. and gallant Member for Barkston Ash (Colonel Ropner), on 15th March last.

Mr. Nabarro: Does the right hon. Gentleman realise that the maxima permitted election expenses set out in the Representation of the People Act, 1948, were based on the purchasing power of the £ at that time, and that the purchasing power of the £ has declined very considerably even since last March? Is it not equitable, therefore, that we should get some adjustment of this figure?

Mr. Ede: I think it desirable that the amount to be spent should be kept as low as possible, but if there were general agreement among the political parties that some alteration was needed, I would be willing to consider it.

Mr. Nally: Will my right hon. Friend bear in mind, in examining the facts contained in this Question, that so far as the Labour Party is concerned we have no desire at all to emulate the splashing around of Tory money that is going on in the constituencies of hon. Members opposite?

Mr. Nabarro: Can the right hon. Gentleman say whether any consultations have taken place between his Department and the principal political parties about this problem, which is becoming ever more virulent?

Mr. Ede: No, Sir, but if my Department were approached we should be quite willing to enter into consultations.

Mr. Mulley: In view of these facts, would my right hon. Friend see that these maximum sums are not exceeded when the election comes without appropriate action following?

Sir H. Williams: Is the right hon. Gentleman aware that at the conference held under Mr. Speaker's presidency I was primarily responsible for the proposal to cut down the cost of election expenses? I very much resent the remarks of the hon. Member for Bilston (Mr. Nally).

Oral Answers to Questions — GOVERNMENT POLICY, WALES

Mr. Emrys Roberts: asked the Prime Minister whether he will make a statement on the proposed new developments of Government policy in Wales announced by the Chairman of the Welsh Advisory Council on 16th July, 1951.

Mr. Ede: I have been asked to reply. I recently received together with some of my colleagues a deputation from the Council for Wales and Monmouthshire, who discussed with us the question of the administrative organisation of Government Departments in Wales and various matters arising from the Council's first Report and, in particular, the problem of rural Wales. These discussions, which were concerned with practical questions, do not imply any change in Government policy in Wales. The Government are always ready to consider sympathetically any constructive proposals which the Council may submit to them.

Mr. Roberts: Will the right hon. Gentleman give an assurance that no decisions of any great importance will be taken without consultation with the Welsh Parliamentary Party, as has happened in the past?

Mr. Ede: I have been asked to give a general supervision to Welsh affairs, and I should certainly desire when any proposals for alteration are made to consult with the Welsh Parliamentary Party, and with anyone else speaking for Wales.

Oral Answers to Questions — BRITISH OFFICERS, PAKISTAN

Mr. Gammans: asked the Prime Minister what representations have been made to him by Pandit Nehru that the British military advisers, officers and ex-officers in Pakistan should be withdrawn; and what steps he proposes to take in this matter.

The Prime Minister (Mr. Attlee): No such representations have been made.

Mr. Gammans: Is not the right hon. Gentleman aware that Mr. Nehru has publicly accused British officers in the service of Pakistan of having assisted in fomenting trouble over Kashmir? Has the right hon. Gentleman made any protest to the Prime Minister of India about these baseless allegations? If not, why has he not done so?

The Prime Minister: Yes, Sir, we are in communication with Mr. Nehru on this subject. There is no basis whatever for these allegations.

Earl Winterton: When the Prime Minister says that he is in communication with Mr. Nehru on this subject, I hope he is not suggesting that he is going to exercise any pressure to prevent these gentlemen, if they so desire, from serving the Government of Pakistan. They have a perfect right to do so.

The Prime Minister: That is a different question altogether from the one on the Order Paper.

Oral Answers to Questions — IDENTITY CARDS

Lieut.-Colonel Lipton: asked the Prime Minister whether he will instruct the Secretary of State for the Home Department, the Minister of Health, the Minister of National Insurance, the Postmaster-General and such other Ministers as may require the use of identity cards in the discharge of their Departmental duties, to institute a comprehensive review of the present system of identity cards.

The Prime Minister: No. Sir. This matter like emergency legislation generally is already kept under review.

Lieut.-Colonel Lipton: Would my right hon. Friend say by whom this matter is kept under review, because at present a wide variety of people seem to have an interest in it and no single Minister is responsible to the House for the way in which these cards are being used or required?

The Prime Minister: Obviously, where this card is used by a particular Department, the Departmental Minister is responsible, but the general matter is, naturally, considered by Ministers acting together.

Mr. Churchill: Is there any reason why we should not revert to the practice of former years and, in time of peace, allow taxicabs to be used by Ministers of the Crown on their ordinary business?

The Prime Minister: I cannot connect that supplementary with the Question which has been asked.

Mr. Emrys Roberts: Can the Prime Minister say whether he has, in fact, consulted the Ministers mentioned in this Question, and can he explain why he takes such a conservative view of this matter?

The Prime Minister: I am not taking a conservative view, but this is a matter which requires great consideration. There are a number of occasions on which the use of this card saves the general public a great deal of trouble. The matter has to be reviewed very carefully.

Mr. Hopkin Morris: Can the right hon. Gentleman say what action he proposes to take in view of the recent decisions of the courts which now allow a practice which does not conform with the law?

Mr. S. Silverman: Can my right hon. Friend say when it became the practice to insist that identity card numbers should be put on applications for passports and that the identity card number should be put on the passport itself? Does he consider this to be a proper use of a power based only on the authority of a Defence Regulation?

The Prime Minister: That matter concerns passports and perhaps my hon. Friend had better put a Question down to the Foreign Office.

Lieut.-Colonel Lipton: Is my right hon. Friend of the opinion that the continuation of the identity card system is essential for the carrying out of our social services? If so, will he introduce the appropriate legislation for that purpose?

Sir H. Williams: May I ask the Prime Minister whether he himself, at this moment, is obeying the law and has his identity card on him? I have mine.

The Prime Minister: I think it is very likely.

PRISONS AND BORSTAL INSTITUTIONS (PUNISHMENTS)

At the end of Questions:

Mr. Ede: I should now like to answer Questions Nos. 17 and 21, Sir.
I am grateful to the Committee for their careful and painstaking inquiry, and I have felt able to accept the great majority of their recommendations. Some of the changes proposed have already been put into effect; others will require alterations in the Prison and Borstal rules relating to England and Wales and amending rules will be laid before Parliament in due course.
It is not possible, within the compass of a reply to a Parliamentary Question, to detail all the measures taken or proposed to be taken in the light of the Committee's Report, but the House may be interested to be informed of my decision on some of the important questions dealt with in the Report.
As regards prisons, the Committee reached the conclusion that prisoners charged with offences against prison discipline should not be allowed legal or other representation at the hearing before a visiting committee (or board of visitors). The Committee, however, made various recommendations about the procedure to be followed by visiting committees when dealing with prison offences.
I accept these recommendations and have decided that the procedure should be brought more nearly into line with that followed by courts of summary jurisdiction, and that the prison rules should be amended so as to provide that not less than two and not more than five members of the visiting committee should adjudicate on any case brought before the committee.
I also accept the Departmental Committee's proposal that restricted diet No. 2 should be replaced by another form of punitive diet and a new diet is being devised by my medical advisers. I accept in principle the Committee's proposal that a special prison should be set aside for prisoners who persistently misbehave and defy authority, but in view of the difficulties of accommodation I see no early prospect of implementing this recommendation.
As regards Borstal institutions, I have taken note of the Committee's view that discipline needs tightening and I have


asked the Prison Commissioners to bring to the notice of governors the comments made by the Committee on the importance of good appearance and good manners as an element in training. I accept the proposal that in future only the board of visitors should have power to deal with absconding and certain serious offences against discipline, and I also agree that the procedure at adjudications should be altered in much the same way as at prisons.
The Committee's recommendation for a special institution for boys who by persistent misconduct interfere with the training of others has been substantially met by the Borstal institution set up in the former prison at Hull.
As regards dietary punishment in Borstal institutions, which was suspended in July, 1948, on my instructions, for an experimental period, the Committee recommend that Borstal governors and boards of visitors should have restored to them the power to impose for limited periods restricted diet No. 1—that is, a bread and water diet.
I accept this recommendation, but I propose to qualify the exercise of this power of punishment by advising governors and boards of visitors that it should be used only as a last resort when other forms of punishment have failed or in exceptional cases of serious misconduct where no other form of punishment is deemed appropriate.

Surgeon Lieut.-Commander Bennett: Can the Home Secretary say whether he has taken any note of the Committee's recommendation about special establishments for the mentally abnormal?

Mr. Ede: I considered that, but in view of present accommodation difficulties the recommendations cannot be implemented. I hope that when the accommodation situation becomes easier the matter will receive attention.

Mr. Boothby: Can the Home Secretary say whether the recommendations he has accepted will also be applied in Scotland? If not, will he bring these matters to the notice of the Secretary of State for Scotland?

Mr. Ede: I have no jurisdiction, of course, over Scottish prisons but I have no doubt that the Report has been read in the Scottish Office and I will draw my

right hon. Friend's attention to the hon. Member's question.

Mr. J. Johnson: While thanking my right hon. Friend for his answer and appreciating its length, may I ask if he will find time for the House to debate this important question before the end of the Session?

Mr. Ede: I do not see any chance of a debate this side of the Recess.

Mr. J. H. Hare: As part of the process of tightening up discipline in Borstals, would the right hon. Gentleman say whether he is prepared to give a ruling that in a Borstal without walls, such as Hollesley in my constituency, where boys repeatedly escape they should not be returned to the same institution but should be sent back to an institution with walls?

Mr. Ede: The problem of the persistent absconder from a particular institution merits special attention. Efforts should be made to place him elsewhere; and in the original drafting of lads to an institution regard should be had to their suitability for the type of institution to which they are being sent.

Mr. S. Silverman: Will my right hon. Friend reconsider his decision about the legal representation of prisoners who are charged with prison offences before visiting magistrates? In that connection, will he bear in mind that when the House abolished corporal punishment generally it retained it for offences against discipline committed in prison? Where there is power to inflict a greater penalty than has the outside court, is it not quite wrong that the accused person should not have the advantage of legal representation?

Mr. Ede: I think we should try the effect of the alteration I have made as a result of the Committee's recommendations. I would remind my hon. Friend and the House that every case of corporal punishment awarded by a visiting committee has to come to me for my personal confirmation. The papers go through my hands and I consider all the circumstances of the case. Since coming into office I have insisted on having in front of me all the evidence given before the visiting committee.

Mr. Osborne: The right hon. Gentleman said that dietary punishment would be re-imposed for a limited period if necessary. How long is the period?

Mr. Ede: The limited period is the period for which this punishment can be awarded to a particular offender.

Mr. Osborne: Yes, but for how long?

BUSINESS OF THE HOUSE

Mr. Churchill: May I ask the Leader of the House if he has any statement to make on business between now and the end of the Session?

The Secretary of State for the Home Department (Mr. Ede): Yes, Sir. The business for next week will be as follows:

MONDAY, 30TH JULY—Supply (26th Allotted Day): Report.

Debate on the Middle East.

At 9.30 p.m. the Report stage of all outstanding Votes will be put from the Chair.

Consideration of Lords Amendments which are expected to be received to the:

Reserve and Auxiliary Forces (Protection of Civil Interests) Bill.

Mineral Workings Bill.

Rivers (Prevention of Pollution) Bill.

Rivers (Prevention of Pollution) (Scotland) (No. 2) Bill.

TUESDAY, 31ST JULY—Second Reading, Consolidated Fund (Appropriation) Bill.

Debate on Transport.

Consideration of the Motion to approve the Draft Herring Industry Scheme, 1951.

WEDNESDAY, 1ST AUGUST—Committee and remaining stages of the Consolidated Fund (Appropriation) Bill.

Debate on Equipment for the Royal Air Force until 7 p.m.

Afterwards, debate on the New Valuation Lists.

During the week we shall ask the House to consider any outstanding business, including any further Amendments to Bills which may be received from another place. If all necessary business has been disposed of, it is hoped to adjourn for the Summer Recess on Thursday, 2nd August, and meet again on Tuesday, 16th October.

On Thursday, 2nd August, it is proposed to meet at 11 a.m. and Questions will be taken until 12 noon.

Mr. Churchill: I observe that it is intended to adjourn for the Summer Recess on Thursday, 2nd August. As we are to separate for a long period, I take it that the Government will be prepared, on

representations being made to them from responsible Parliamentary quarters, to ask Mr. Speaker to summon the House before 16th October should special circumstances demand it. Naturally, we all hope that such special circumstances will not arise.

Mr. Ede: As the right hon. Gentleman is aware, there is now a Standing Order which operates throughout the Recess. Should it be necessary to recall the House that will be done.

Mr. Clement Davies: With regard to business for next week, may I ask if the right hon. Gentleman realises that there is still a considerable amount of dissatisfaction at the treatment that has been meted out to Tshekedi Khama—dissatisfaction which has been expressed' by hon. Members behind him as well as by other hon. Members? Does the right hon. Gentleman recall that when I asked for a debate upon this matter, Mr. Speaker, in refusing my request, reminded me rightly that there would be an opportunity on the Consolidated Fund (Appropriation) Bill? Would it not be possible for this matter to be raised on Tuesday, or must the whole time be devoted to the question of transport?

Mr. Ede: The Consolidated Fund (Appropriation) Bill is exempted business, and it is possible to have a second matter raised after the first has been disposed of if hon. Members catch Mr. Speaker's eye. It is also possible, of course, for it to be raised on the Adjournment on Thursday.

Mr. C. S. Taylor: Would the right hon. Gentleman consider giving a limited time, say half an hour or an hour, if possible, to debate the Motion in the name of my hon. Friends and myself about the Dean of Canterbury?

[That an humble Address be presented to His Majesty, praying that the Letters Patent granted to Dr. Hewlett Johnson appointing him Dean of Canterbury be revoked on the grounds that he has been guilty of preaching subversive and heretical doctrines.]

Mr. Ede: No, Sir. I do not think that so controversial a subject could be discussed in half an hour.

Mr. H. Hynd: In view of what happened last night, is the House to get an opportunity to continue the debate on the case of Mr. Barkley?

Mr. Ede: It is possible for that matter to be raised again.

Mr. Hynd: When?

Earl Winterton: In view of the fact that there can only be one Report of a Select Committee like the Committee of Privileges, and technically not a minority Re- port as in the case of a Royal Commission, and as there was, in fact, a minority report in the case of Lady Mellor, in the shape of an Amendment which was moved by myself and which was defeated by only one vote, will the right hon. Gentleman, in view of the important principle, as I claim, enshrined in the Amendment, in fairness to the lady concerned, provide an opportunity for a discussion of this matter in the House?

Mr. Ede: Yes, Sir. I hope that it may be possible during the week to arrange for a debate on that Report from the Select Committee. There is also, of course, another matter which has been referred to the Select Committee, on the complaint of my hon. Friend the Member for Bolton, West (Mr. J. Lewis). I did not myself attend the Committee on that business because it might have been thought improper for me, as Home Secretary, to take part in the discussions in the Committee since certain matters relating to the Metropolitan Police may have been involved. I do not know whether a Report has yet been agreed on by that Committee, but if that becomes available in time—and I hope that every effort will be made through the Stationery Office to get it ready in time—I would also hope that the House might have an opportunity of considering that during the coming week.

Mr. Anthony Greenwood: In reply to my hon. Friend the Member for Accrington (Mr. H. Hynd), the Leader of the House said that it will be possible for the question of the Motion in the Home Secretary's name relating to Mr. Barkley to be raised again. Could my right hon. Friend tell the House who will be able to raise that Motion, when it will be possible to do so, and whether he will assure the House that if it is raised he will allow the discussion to continue?

Mr. Ede: That particular Motion, as a matter of fact, is inapt because, being moved early in the morning, it alluded to "this day" when quite clearly, in normal circumstances, it should allude to some other day. Of course, if there is a general

wish that that should be considered I shall have to try to find time for it.

Mr. Clement Davies: It may be a matter of convenience to the Leader of the House to know that the Committee of Privileges has agreed upon their Report. [HON. MEMBERS: "Most improper."] I thought it might be convenient to the right hon. Gentleman to know that that has happened and that the Report is in the hands of the printers. It may help on business.

Mr. Ede: It is a very great help and it is to my convenience. I hope that the printers will be able to present it in time for us to discuss the matter.

Mr. Frank McLeavy: Will the Leader of the House find time at any early date for us to debate the Motion standing in the name of myself and other Members of the House?
[That an humble Address be presented to His Majesty praying that he will be graciously pleased to direct that the powers and functions of the Lord Great Chamberlain and other functionaries in so far as they relate to the administration, management and staffing of the Palace of Westminster be transferred to and in future exercised by a Joint Committee of both Houses of Parliament.]

Mr. Ede: It will not be possible to have that matter debated this side of the Recess.

Brigadier Head: In view of the recent statement by the Minister of Defence that he was about to publish a White Paper on Service pensions, can the Leader of the House say whether that White Paper will be available to the House before the Adjournment?

Mr. Ede: I cannot answer that question, but I will make inquiries of my right hon. Friend.

Mr. Pannell: May I ask whether the Government contemplate bringing in any legislation at an early date to amend the House of Commons (Offices) Act, 1812, by a more modern form of legislation which will guarantee the rights of the lower paid staff to have trade union representation, and put an end to patronage?

Mr. Ede: There is no intention of introducing legislation on that matter during the current Session.

Mr. Peter Thorneycroft: Reverting to the right hon. Gentleman's suggestion that Tuesday's debate on the Consolidated Fund (Appropriation) Bill might in some way form a mixture of Tshekedi Khama and the Transport Commission, might I remind him that we only get one day a year for debating transport? [HON. MEMBERS: "No."] There is only one day a year which can be devoted to transport. It would really be extremely difficult to mix it with any other subject.

Mr. Ede: I think the hon. Gentleman did not quite follow the suggestion that I made. On occasions the Consolidated Fund (Appropriation) Bill discussions cover more than one subject, but they are not mixed. As I understand it, by some process of divination Mr. Speaker knows which Members want to talk on the first subject, and they talk. When that has been disposed of, Mr. Speaker seems to End people who wish to talk on the second subject. I would point out that there is no limit to the time on the Consolidated Fund (Appropriation) Bill. It is exempted business, and, generally, when such a situation as I have described arises there is an arrangement between Members who wish to participate as to the time to be allotted.

Mr. Churchill: I trust that there is no danger of these other topics which may be introduced getting in the way of the Motion to approve the Draft Herring Industry Scheme?

Mr. Ede: I should like to reassure the right hon. Gentleman, and also the hon. Member for Aberdeenshire, East (Mr. Boothby), that we will see that that matter gets its proper consideration.

Mr. Boothby: I am much obliged.

Sir Herbert Williams: I should like to put partly to you, Mr. Speaker, and partly to the Leader of the House a question relating to the mechanism of calling Parliament together in the event of an emergency. My mind goes back to 24th August, 1939, when Mr. Speaker at that time, on representations from the Government, published a notice in the "London Gazette," although, in fact, we were recalled by an announcement on the B.B.C. If an emergency does arise, the mechanism to be adopted in order that Parliament may re-assemble is of importance to every hon. Member. The notice on that occasion went out at 11 o'clock

in the morning, and at 2.45 p.m. 400 Members came here, which was a very remarkable achievement. I think we ought to be told—because this is a rather difficult year—what steps would be taken—what mechanical steps—to ensure that hon. Members are aware of the fact that an emergency Session of Parliament has been called?

Mr. Ede: As the hon. Gentleman said, this is, I believe, a matter for Mr. Speaker and it appears to have worked very well on the occasion to which he alluded. I have no doubt that every modern means of getting in touch with Members would be used.

Mr. Emrys Hughes: In view of the uncontroversial nature of the matter, could the Leader of the House not give further consideration to giving time to the Motion by six hon. Members opposite for the dismissal of the Archbishop of Canterbury?

Hon. Members: The Dean of Canterbury.

QUESTIONS TO MINISTERS

Mr. Speaker: The hon. Lady the Member for Tynemouth (Miss Ward) has not risen to ask me her question. Does she wish me to give my Ruling straight away?

Miss Ward: Yes, Sir.

Mr. Speaker: The hon. Lady recently asked me why it was in order for the Minister of Fuel and Power to deal with a Question about miners when the Minister of Transport refused to deal with a Question about railway workers.
I am sure she will realise that one cannot answer wide generalisations of that sort. Ministers are not responsible for the day-to-day working of the nationalised industries, and have refused to make ad hocinquiries to secure information on that working.
The answer given on 23rd July by the Minister of Fuel and Power, on which the hon. Lady's submission is based, dealt with statistical information which this Minister has collected and published for many years, and for which no application has to be made to the Board. It is wholly the responsibility of the Minister. I have no knowledge of any similar statistics collected or published by the Minister of Transport. If the hon. Lady


can satisfy me that such exist, Questions upon them would equally be in order.
On the same day the Minister answered a Question as to the steps he himself proposed to take to increase the numbers of miners—not steps which the Board might take.
These Questions, therefore, both fulfilled the condition of Ministerial responsibility necessary to enable them to go on the Paper.

Mr. P. Thorneycroft: Arising out of that Ruling, Sir—and without in any way questioning it—is not the process simply this: that Questions are initially put down to one or other of those Ministers, and if at any time one of those Ministers rises and says, "This is not my responsibility," then, from that time on, no further Question upon the subject is admissible; so that, in point of fact, the decision as to whether any Question is admissible lies in the hands of the Ministers themselves, and they have only to refuse to answer a particular type of Question for no further Questions to be permitted.

Mr. Speaker: That is not so. Very often we argue very much with a Minister as to whether it is his responsibility or not. Very often we allow the Question against the Minister's wishes. We have to take some responsibility in the matter, in common fairness. The Prime Minister.

The Prime Minister: The Prime Minister indicated assent.

Miss Ward: With very great respect, there have been Questions which have been answered by the right hon. Gentleman the Minister of Fuel and Power on the shortage of miners in the pits—Questions which have nothing whatever to do with statistical information. Surely if the Minister of Fuel and Power accepts responsibility—and he has accepted the responsibility ever since I have returned to the House of Commons—for dealing with this matter it is not in order for the Minister of Transport to refuse in a similar case. Otherwise, the Minister of Fuel and Power must always have been out of order.

Mr. Speaker: If the hon. Lady will draw my attention to these Questions I will look at them. I cannot remember every Question which is asked. I cannot carry that in my head over a period of

time. I will certainly look into any Questions she may bring to my notice.

The Chancellor of the Exchequer (Mr. Gaitskell): I beg to move—

Mr. Bowles: On a point of order. May I ask, Mr. Speaker, whether you called the Prime Minister's name and he nodded? Is that an indication of "Now, Sir," or do we not need a "Now, Sir," at this stage? You called the Prime Minister, who nodded. Then the hon. Lady the Member for Tynemouth (Miss Ward) asked a question. May I ask you whether the Prime Minister said "Now," or whether it is enough for him to have nodded?

Mr. Speaker: No one had to say "Now," for this is the ordinary business.

Mr. Bowles: I did not hear it said and I listened very carefully indeed.

Mr. Speaker: In any case, we want to get on with the business.

Mr. Bowles: I agree that we want to get on with business, but we also want to understand where we are. I understand that the Assistant Whip says he said "Now." With great respect, I listened very carefully for anybody on the Front Bench to say "Now," and nobody did. I doubt very much whether "Now" is necessary at this stage. I only ask whether the Prime Minister said "Now" when you called him, for I do not think he did.

Mr. Speaker: I do not think "Now" is at all necessary at this stage. I called the name of the Prime Minister and he nodded, but there was no need for him to nod at all; and then I went on to call the right hon. Gentleman the Chancellor of the Exchequer, who I knew was going to initiate today's debate.

Mr. Bowles: I wonder whether you have looked at the matter since last night, Mr. Speaker, and whether even Orders of the Day have to be introduced by the word "Now." I have looked it up and I doubt very much whether they always have to be.

Mr. Speaker: I do not think it is necessary always. The Orders are read at the beginning. This point arises at the end of Business, when we are going through the Orders which have not been reached or are not going to be called.

FINANCIAL AND ECONOMIC SITUATION

3.58 p.m.

The Chancellor of the Exchequer (Mr. Gaitskell): I beg to move:
That this House, recognising the dangers of uncontrolled inflation to the defence programme, the balance of payments and the stability of the economy, urges that every effort be made, both through international action and internal measures, to check the rise in costs and prices and limit the pressure of excessive demand.
Three and a half months have passed since the Budget and the publication of the Economic Survey, and it is clearly desirable that before we separate for the Summer Recess we should review the economic developments which have taken place since then, examine the prospect ahead as far as we can, and discuss what further measures may be required.
In my Budget speech I picked cut three outstanding features of the economic situation—the impact of the defence programme itself; the additional burden imposed upon us by the way in which the prices of our imports had risen so much more than the prices of our exports; and shortages of materials.
I should like first of all to say something about production, although to some extent this was covered in last Monday's debate. In the Survey it was estimated that the level of industrial production this year might be some 4 per cent, higher than in 1950. In the five months up to May, it has actually been running about 5 per cent, higher than in the corresponding months of 1950, so that so far we have been doing at least as well as we expected. But what is the outlook for the rest of the year?
For many imported raw materials I would say that prospects are now rather brighter. This is true of sulphur, of tungsten and of molybdenum, though supplies will still be below our requirements. It is true of cotton, where the prospect of a good American crop this year has eased the situation. On the other hand, shortages of nickel, copper and zinc all remain acute, though they may be eased to some small extent, at any rate, by substitution.
In my view, the biggest direct check to the expansion of our industrial production at the moment is the shortage of

steel. It is primarily shortage of imported iron ore and scrap which is limiting steel output, but despite this we have, I think, a fair chance of reaching a production of 16 million ingot tons this year. With some reduction in stocks and with the greatest possible economy in the use of steel, this should, I think, support an increase of 4 per cent. in total industrial production during the remainder of the year.
But it is when we look ahead to 1952 that there is ground for serious anxiety, and this brings me to the subject of coal. The output of coal has been increasing, and the whole nation appreciates the splendid response made by the miners to the Prime Minister's appeal. But home consumption is rising even faster, though I cannot agree that this is directly attributable to re-armament. Given full employment and rising productivity, the industrial use of coal would probably be just as high if we had not embarked on the re-armament programme.
The first impact, of course, of the coal shortage inevitably tends to be on coal exports, and in the first five months of the year these amounted to only 2,500,000 tons against 6,750,000 in the corresponding months of 1950. Most of these exports, or at any rate a large proportion of them, go to Western Europe and occupy a key position in our trade with those countries upon whom we depend for many supplies which are absolutely vital to our industries—timber, wood pulp, pyrites, and, most important of all, the bulk of the imported iron ore which is and will be badly needed for producing steel at home.
Unless we can export enough coal we risk losing those essential supplies and the whole of our industrial effort will suffer in consequence. It is a difficult but not an insoluble problem. The remedy lies in our own hands. We have simply got somehow or another to produce more coal, and we have also got to find means of reducing home consumption in ways which cause the least damage to our industries. My right hon. Friend is giving the closest attention to this problem, and I do not propose to say anything more about it now.
Let me, however, say one further thing in connection with production. I draw the attention of the House to the continuing high demand for labour throughout the whole economy. The latest unemploy-


ment figures are the lowest since September, 1945, and represent no more than 1 per cent. of the total employees. This, of course, makes absolute nonsense of any suggestion that re-armament would lead to mass unemployment in this country and that before the middle of the year there would be considerable numbers out of work because of shortages of imported materials.
In fact, there are far more jobs than men and women to fill them. Firms which cannot keep their existing labour force fully employed ought to release some of their workers to find more important work elsewhere. At a time like this, too, when it is more than ever urgent to secure the utmost practicable increase in productivity, there must be no wastage of labour.
I now turn to the external position, and will first say something about the gold and dollar balance of the sterling area. The figures for the second quarter which I recently gave the House confirmed the forecast made in the Economic Survey that the situation this year would be considerably less favourable than that of last year. It is not easy to make any precise forecast of the trends of the sterling area's gold and sterling balance during the rest of the year, but I must tell the House that there will probably be a deficit in the third quarter—possibly a quite substantial one. There are, however, special reasons for this.
First of all, we shall be buying an exceptionally large amount of dollar imports during this quarter, probably spending at least 100 million dollars more than in a normal quarter. Secondly, we shall continue, I think, to lose dollars to the European Payments Union—again largely on account of seasonal factors. In fact, we may well pay out during this quarter virtually the whole of the rest of the dollars which we have received from the Union. After that, of course, should the adverse balance with the European Payments Union continue—which is by no means certain, and indeed, I think, unlikely—we should finance it out of credits we have accumulated, or could draw under the rules; and, until those were exhausted, no more gold or dollars would be paid. Finally, there are certain special gold and dollar payments to be made during the third quarter which will not recur.
Too much, therefore, should not be concluded from what happens in the

current quarter. So far as I can see at present, the fourth quarter's results will not be so unfavourable, though again I think it unlikely that they will show a surplus. While, therefore, we should not exaggerate this worsening of our dollar position, the changed outlook does call for some corrective action.
The Government propose, therefore, to review the dollar import programme, which is, of course, very much larger than the programme last year, and reduce expenditure wherever this can be done without damage to our long-term interests. At the same time we must clearly press on more energetically than ever with dollar exports. We look to industry to sustain and, where possible, increase, its efforts towards this objective. I think that the House will agree that the Dollar Exports Board rendered a great service to the country by stimulating among exporters an effective interest in dollar markets. Its successor, the Dollar Export Advisory Council, will, I know, carry on this vital work with no less energy and enthusiasm.
Finally, I would say that I have, of course, kept other Governments in the sterling area currently informed, and I hope very much that it will be possible to hold another meeting of the Commonwealth Finance Ministers at the end of the year, or, at any rate, shortly afterwards.
I come now to the prospects of the United Kingdom's balance of payments, in which, as the House will recall, our objective was to maintain an overall balance apart from imports required for stockpiling. It was estimated in the Economic Survey that the 1951 import bill would amount to about £3,200 million, towards which the net invisible earnings might contribute some £450 million. That left £2,750 million to be obtained by visible exports and re-exports, an increase of rather over £500 million, compared with actual earnings in 1950. It was envisaged that a good deal of this increase—a substantial one—would come from higher export prices, but that some increase in volume would also be needed.
It is too early yet to predict the outcome for the whole of 1951, but the rapid rise in import prices during the past six months suggests that, on account of higher prices alone, the total cost of imports this year will, perhaps, be well over £100 million more than the Survey


allowed for, even after making allowance for the reduction in import prices to be expected in the coming months—about which I shall have a little more to say later on. The invisible account, too, has developed less favourably, and in 1951 as a whole I think that the invisible earnings are unlikely now to exceed £400 million.
Consequently, export earnings will have to be considerably above the Survey target to keep the overseas accounts in balance this year—even excluding the stockpiling, which is excluded from all the import figures I have given. In fact, export earnings in the first half year were only just over £1,300 million. It looks as if we shall need £1,600 million in the second half of the year if we are to pay in full for our current imports, again excluding stockpiling. This means a substantial increase—an average increase of something like a quarter in the second half of the year compared with the first.

Mr. Sydney Silverman: Will my right hon. Friend say how much we should need if we included stockpiling?

Mr. Gaitskell: No: we do not give the figures for stockpiling.
We can expect some further revenue from higher export prices. Export prices have been rising fairly steadily, mainly as a result of the higher costs of imported materials, particularly, I may say, in the field of consumer goods. By June, for example, the prices of textile exports were about 37 per cent. above the 1950 average. The prices of metal goods exports—the process of production, of course, involves a longer period between the work on the raw material and the turning out of the finished product—for which, generally, there is a large unsatisfied demand abroad, were only 12 per cent. up.
It is the Government's policy to leave it to the judgment of the individual exporter to decide, in the light of his special knowledge, what prices to charge for his exports. Quite obviously, no exporter is likely to raise his prices to an extent which would endanger his future trade, but we cannot reasonably expect him to keep his prices below the international level; nor would the Government wish him to do this, in view of the

nation's urgent need to increase export earnings.
We cannot, however, rely on price increases alone, even if, as I suspect, these will continue in the export field. We must also export a greater volume, and because of the impact of the defence programme, as the Survey made plain, we must look first and foremost to the consumer goods industries. We shall also need to ensure that the volume of exports from the metal using industries is at least maintained at the 1950 level, as the Survey estimated. The Government are already engaged in discussions with individual industries on ways and means of increasing exports. If in any particular case exports are held up because too much is going to the home market, we shall not hesitate to use any physical controls that are appropriate to divert goods to export.
We also have to be sure that the problem of expanding our exports is not made more difficult by excessive monetary demand at home. I shall have more to say on this later, but it is quite clear that we cannot expect to continue consuming as much as in the first few months of this year, when consumption is estimated to have been about 5 per cent. higher in real terms than in the same period of 1950.
I must now say a few words on the cause of the increases in import prices since the middle of 1950 which have turned the terms of trade so much against us and have added so greatly to our burdens. These changes are not the result of devaluation. Nobody disputes, of course, that in the autumn of 1949 and the early months of 1950 there was a rise in the sterling prices of some of our imports greater than, or unaccompanied by, a rise in their dollar prices, but this movement had largely spent itself before Korea.
What we are here concerned with is a rise in both dollar and sterling prices, which affected dollar and sterling countries alike, and, therefore, could not possibly have been due to any change in exchange rates. Thus, compared with June, 1950, the price of sugar, in dollars, showed at its peak a rise in dollars of 85 per cent.; that of wool, a rise of 129 per cent.; of tin, 138 per cent., and of rubber, 162 per cent. These are the peak figures. Between June, 1950, and March, 1951, the average price of im-


ports into the United States of America rose by 30 per cent., or almost exactly the same as the figure for the United Kingdom.
I hope that in the face of these hard facts and figures, the right hon. Gentleman the Leader of the Opposition will now stop drooling at weekends about devaluation and world prices, of which he knows little, and I hope that he will put into the wastepaper basket his out-of-date and inaccurate Conservative Central Office leaflets, with which evidently he was briefed on that occasion.

Sir Arthur Salter: Even if it is true that the recent rises in prices are not due to a continuing effect of devaluation which was not previously exhausted, of course those are rises in relation to a height which had itself been caused by devaluation.

Mr. Gaitskell: The figures I have given of the rise in dollar prices for these commodities are absolutely conclusive on this subject. When the right hon. Gentleman studies them, he will realise that that is so.

Sir A. Salter: No.

Mr. Gaitskell: These higher import prices are also, however, not the result of our own re-armament. If we were to reduce our defence programme by, say, £200 or £300 million, and even if this were not offset by additional civilian expenditure, it would still have very little influence on the world prices of the vast majority of materials. The price increases are plainly the result of a larger world demand following on Korea and re-armament in many countries, particularly, of course, in the United States, the scale of whose purchases is inevitably huge in relation to other countries.
While we have suffered exceptionally in recent months, because we depend so much on these imports and because the cost of imports here is particularly high as a proportion of our national income, the producing countries have, of course, enjoyed some benefits from this change. These countries include some in South and South-East Asia who are our partners in the Colombo plan, whose economic conditions we are glad to see improved and who are now in a much stronger financial position than a year ago.
Even so, in the longer run I doubt if such changes are for the benefit of either producers or consumers. Very high prices for primary products set up inflationary forces in the countries which export them, and past experience shows only too plainly that such price increases are nearly always followed by equally rapid declines. It is therefore of the utmost importance, not only for the United Kingdom but, I believe, for the whole free world, to secure a greater measure of stability in these world commodity prices. If this cannot be done, if prices either start rising again or fall very sharply, then the economic and political consequences cannot but be very serious.
In our view, this problem can only be dealt with by international agreement. His Majesty's Government took a leading part, following upon the visit of my right hon. Friend the Prime Minister, in setting up in Washington the International Materials Conference for the purpose of sharing out fairly the available supplies of scarce materials. I am glad to say that there have already been good results. We believe that in suitable cases the Conference should also try to agree on arrangments for a price, or range of prices, fair to consumers as well as to producers.
We have already made our views on this matter known to the Governments of the United States and France and to the Council of the O.E.E.C. We are also, of course, in touch with the Governments of the Commonwealth on the matter. I hope myself to pursue the matter further when I go to Washington in September. I have no reason to think that other countries do not share our views, either on the desirability of stability of prices or upon procedure through the International Materials Conference Commodity Committees.
In recent months, as the House will be aware, there have been some considerable falls from the highest levels of raw material prices. In February, for example, tin was selling at £1,500 a ton. Now it stands at about £875 a ton. In February, rubber was about 6s. per lb. It has since fallen to about 4s. per lb. Merino wool, which reached 295d. per lb., is now down to about 180d. United States cotton futures, which were 42 cents per lb. in March, have now fallen to 35 cents. There have been reductions in some other


commodity prices also. On the other hand, a few prices, including non-ferrous metals, are still rising.
I should now like to turn to domestic matters. I do not propose to say anything on public expenditure generally, because this subject has been very thoroughly discussed in our earlier debates. The crucial fact, of course, is that about half our public expenditure is on defence and the National Debt, and of the rest over three-quarters is on the social services. In the small remaining section, as I explained in my Budget speech, we have made considerable economies, and we shall continue to do all that we can to keep expenditure down.
In the field of social services, however, and with the full approval of the House, we are already committed to an increase in expenditure next year of over £70 million above this. That extra money is for the most part required for pensioners and for those on National Assistance. I hope that nobody grudes it. We should accept it just as willingly as we do the requirements of national security.
I have spoken of the rise in international commodity prices and its effects on our total imports bill, and therefore on our balance of payments position. But, of course, to the majority of people its consequence is apparent in a far more obvious and immediately painful direction: that is, in its effects on the cost of living. All of us are, naturally, worried about rising prices at home, and it is to this subject that most of the rest of my speech will therefore be devoted.
First, I should like to try to remove some prevalent misunderstandings. One of these is that the price increases from which we are all suffering are somehow peculiar to this country or are the special product of actions that the Government have taken or have failed to take. Indeed, there is on the Order Paper an Amendment to the Motion which implies that. The best way of showing how completely unrelated is this idea to the facts is to give the figures of the increases that have taken place in retail prices in other countries. I particularly commend this information to the right hon. Gentleman the Leader of the Opposition, whose continual references in his weekend outbursts to the fall of the purchasing power of our money as something due to the special

wickedness of the Government, are, he will no doubt confirm, not deliberate misrepresentation but merely an incomplete awareness of the facts.
I shall give these figures, which are taken from the United Nations Bulletin of Statistics, in an ascending scale of price increases. In the 11 months from June last year to May this year, retail prices in Switzerland rose by 5 per cent.; in the United Kingdom by 9 per cent.; in the United States by 9 per cent.; in Italy by 10 per cent.; in Denmark and Canada by 11 per cent.; in Belgium by 13 per cent.; and in France, or more strictly in Paris, by 21 per cent.
Figures for Australia and New Zealand are not available until such recent dates, but from June to December last year—that is, for about half the period only—the rise in New Zealand prices was 6 per cent. and in Australia 9 per cent. These are the official figures issued by the various countries. They are not in every respect comparable, but I have no doubt that by and large the comparison is accurate. It speaks for itself.
It is also sometimes said that the Government have deliberately allowed prices to rise so as somehow or other to pay for re-armament in this way. There is on occasion a curious alliance between some hon. Members opposite, the hon. Member for Scarborough and Whitby (Mr. Spearman), for instance, and some of my hon. Friends who do not agree with me on this matter. If by this is meant that we are re-arming at the same time as a world inflation is occurring, and that the high prices caused by this inflation and by consequential wage increases are not being offset by increased subsidies, this is true. I have already given some of the justification for it, and I shall give some later in this speech. But if by this charge is meant that the Government are deliberately pursuing an inflationary budgetary policy so that the burden caused by higher defence expenditure is not offset by taxation, or that this taxation is not firmly placed on the shoulders of those best able to bear it, then this is a charge which I emphatically repudiate.
The burden of re-armament itself falls on the consumer only to the extent that the Budget increased certain taxes. The main additional taxes of the Budget fell on company profits, on petrol, on


Purchase Tax on motor cars and on other less essential goods, and on the Income Tax. I do not think myself, nor was there any evidence produced during our long debates on the Budget or the Finance Bill, that these taxes were unfair, or that they fell on those least able to bear them. The outstanding fact is surely this. The rise in retail prices in the United Kingdom in the past year has, as I have said, been mainly due to the rise in import prices. It has not been due to our internal re-armament programme. Those who attribute it to re-armament are, therefore, either simply misunderstanding or misrepresenting the facts.
Secondly, of course, the burden of higher import prices, as I pointed out in my Budget speech, is one that the nation as a whole must bear, if we are to come near to balancing our overseas accounts; and this burden as a whole cannot be avoided by any alteration in taxes, subsidies or internal financial policy. What can be achieved by internal policy is, within limits, to redistribute the burden between individuals within the United Kingdom. Those who argue that we should have done this by increasing both the level of subsidies and the level of taxation still higher to pay for them do not, I believe, appreciate the figures which are involved.
To have held the cost of living index steady from September, 1950, when it began to go up after a longish period of stability, to the end of 1951 would by then have cost an additional £600 million to £700 million a year in subsidies—over and above the present £410 million—or a total of at least £1,000 million a year in subsidies.
I think that the House will agree that that is a pretty staggering figure, but it is not really surprising when one reflects it costs roughly £40 million a year in subsidies to prevent an increase of one point in the index. If, therefore, we had sought to prevent any rise in the cost of living by subsidies and taxation, on the lines I am discussing, it would have meant, for example, an increase in the standard rate of Income Tax from 9s. 6d. to 12s. 6d. in the pound, and of the two lower rates from 5s. 6d. to 8s. 6d. and 3s. to 6s. These increases, I think, speak for themselves.
It may be said, of course, that there is no need to contemplate such an extreme

proposal. Why not raise, for example, the subsidies by, say, £00 million to make a ceiling of £510 million instead of £410 million? My reason for rejecting that proposal, of course, is as follows.
The purpose of the subsidies, we can surely agree, is primarily to maintain stability of income and prices, if that can be done. As such, they may be very valuable and I do not think that anyone would question that. They were introduced for this purpose during the war when, partly because of Lease-Lend and partly because of a series of long-term purchase agreements, the import prices of the food that we had to buy in those years did not rise substantially.
After the war, however, the average cost of imports began to rise, and with it the extent of the subsidies. My right hon. Friend the Minister of Local Government and Planning will well recall that between 1945 and 1948 they nearly doubled. I must point out to the House that, despite this, wages and salaries rose also. Finally, the then Chancellor of the Exchequer had to impose a ceiling in order to prevent the Budget from getting out of control and becoming the victim of movements in world prices.
This year—and we must face this—if we had spent another £100 million in subsidies, it would certainly not have prevented a steep rise in the cost of living index. The difference that it would have made would have been only about 2½points. Can anyone really suppose that this would have made a crucial difference in achieving stability? But to pay for it, of course, would have involved a further increase of 6d. in the Income Tax at all three levels. If, on the other hand, such an increase in subsidies, as I claim, could not be relied upon to achieve greater stability, then surely they must be compared as a matter of social policy with many other claims on the Exchequer, especially in the field of social services, such as higher pensions and an increase in family allowances, both of which are fairly closely related to need and are at least subject to taxation.
It might have been said that we should not have attempted to offset increased expenditure on subsidies by higher taxation at all, and that we should have abandoned altogether the budgetary principles adopted in the last few years and instead have accepted an openly infla


tionary budget. I doubt whether any hon. Member would seriously advocate such an irresponsible course, which would clearly stoke up more vigorously the very inflation we are all concerned to check, and tend to raise steeply the price of everything that is not subsidised.
Incidentally—perhaps that is the wrong word, because it is more important than that—at the present time such a course would have had a particularly disastrous effect on our balance of payments which, as I have already indicated. is by no means in a secure position. By leaving in the hands of the public more purchasing power, it would have created a more powerful force attracting to the home market goods which certainly ought to have been sent overseas.
It comes to this. Those who say that we should make a larger increase in subsidies must prove to the House either that they are prepared to face the inflationary effects of not increasing taxation or that they propose heavy increases in taxation and can show that this way of spending the money is socially better than any other. I do not myself believe that without the assurance of greater stability it would have been any wiser this year to increase subsidies than to adopt the policy of cutting them which the Opposition, with its usual spasms of indecision and vacillation periodically advocates.
I will therefore just add that should it become possible, by a slight increase in the amount of subsidies—and from the figures I have given it would have to be very slight, so as not to impose too heavy a fiscal burden—to secure general agreement on a measure of internal stabilisation, then I must say that we should have to reconsider our attitude. The case for the subsidies is essentially that they should help us to stabilise the position internally. If there were solid evidence that this could really be achieved and achieved at no great cost, we should. I agree, be foolish to reject the possibility.
So much, then, for something which in my view we cannot do to deal with the problem. But what can and should we do? Before I deal with that I should like to give the House some idea of my views on the outlook for prices, as this is clearly fundamental to any assessment of the problem with which we are dealing.
Some further rise in retail prices must occur. There have been some increases in the cost of basic commodities which I have mentioned which have yet to work their way through to the retail price level and be reflected in our weekly bills. In food, the rise in meat prices resulting from the Argentine Agreement, which the Minister of Food announced some time ago, has just begun to operate. This and certain other changes in food prices which have occurred or can be foreseen, some of them seasonal, are likely by the middle of August to have raised by two points the June retail price index of 125. Most of that increase has in fact already taken place.
In the last quarter of the year there may be some small seasonal increases in the price of a few foodstuffs and of fuel and light. In addition, increases must be expected in the prices of some items of clothing and household goods. If this forecast proves to be right—and it is the best I can make—it means that, with the increase in meat prices behind us, the increases we have to face in the next half-year will be a good deal less steep than those which have recently occurred.
That, of course, at once raises the question, what is the outlook for future world prices? What must we expect from the international factors which have played by far the greatest part in disturbing our economy? No one can make clear-cut predictions, but I have already drawn attention to certain substantial falls in the price of commodities entering largely into our import and manufacturing costs. The new Board of Trade index of basic material prices shows a fall of over 12 per cent. in the past three months. There is at present no sign of any contrary tendency elsewhere big enough to offset these falls.
The efforts which we ourselves are making to achieve a measure of international price stability, and those which I am sure other countries will also make. strengthen the hope that we can avoid any recurrence of such rises as began to affect world markets after Korea. If this were to be achieved, as I hope it will be, we could reasonably hope to see the end to what has unquestionably been the major cause of the rapid increase in the cost of living which is causing all of us so much concern.
Of course, this is not a certainty, but I think on balance it is a distinct possibility. It is nevertheless essential that all practicable steps should be taken to limit so far as possible every internal cause which might operate independently of these external factors to drive up prices. One of these steps which can be taken is price control, and after 10 years' experience of it there is no doubt in my mind about the valuable part it has played in checking inflation. The price increases in France and other countries, which I mentioned a little time ago, where incidentally higher import prices have far less effect on the internal economy than here, show the importance and the success of this and other controls.
There has been, I know, some impression recently that price control has been less strictly enforced than it was. It is, of course, true that price control was abolished in certain instances during the last three years where its value seemed at an end. It is also true that some of the meticulous forms of control which existed during the war were dropped. But, on the whole, there is no doubt that the increase in profits which has taken place has been least in the price-controlled sector of our economy. There have no doubt been increases in profits in these industries, but I can assure the House, after the examination that we have made of the position, that that has largely been because of greater exports than because of any leniency in administration.
There are inherent limitations, all the same, in price control. It is obviously more effective where the product is more or less standard, with no great divergencies in the costs of the various producers. Without standardisation and close control of specifications, it is difficult to ensure the maintenance of quality, and a form of price control evasion can develop. That is one of the great arguments for the utility schemes.
Where the costs of different firms diverge, there is bound to be a problem of settling what maximum prices are appropriate. On the one hand, adequate production and distribution must be maintained. If prices are fixed to suit the firms with lower costs, the danger has to be faced that other firms may be unable to carry on. That may not in itself matter unless there is a position where the low-cost firms cannot, for one reason or

another, expand correspondingly to make up for the lost production. If, on the other hand, prices are fixed at higher levels, the more efficient or maybe more fortunate firms may make substantial profits.
The Government have had under review the present scope and machinery of price control and have come to the conclusion that, in view of the present economic situation, further steps must now be taken In the Board of Trade field, all utility goods and many others are already price controlled. The Central Price Regulation Committee has recently completed a special review of goods which have become de-controlled, and they have recommended the re-imposition of control, either by statutory or voluntary means, over a considerable range of goods. The list is a long one and I will not read the whole of it out—aluminium hollow-ware, washing machines, carpet sweepers, brooms and brushes, mops, spoons and forks, cutlery, general kitchen utensils, toilet paper, stationery, paper handkerchiefs and so on.
Discussions on the most suitable form of control are now taking place with the industries concerned, and in some cases the manufacturers, I am glad to say, have agreed not to raise their prices meanwhile without the Committee's approval. The Committee is now extending its review over all cases where control has been dropped since the war.
We have also been considering how far we should now return to more precise forms of control. For many goods in the Board of Trade field the present control is, as the House is probably aware, by cash maximum prices only. My right hon. and learned Friend has come to the conclusion that in appropriate cases, and in consultation with the trades concerned, we should now supplement this by the cost-plus method, as was done during the war.
In order to meet the objection that this method penalises efficiency—it was always the difficulty about it—and encourages inflation of costs, he has in mind to provide for two price ceilings, below the lower of which cost-plus would not operate, manufacturers being free to choose which ceiling they will use.
In the case of food, two-thirds of the money spent for the home goes on items already subject to price control. In the


remaining one-third are included some highly perishable commodities, subject to marked seasonal fluctuations of supply and demand, and difficult by their nature to control as regards quality—for example, fresh fruit and vegetables, which account for 11½ per cent. of all the expenditure on food. My right hon. Friend the Minister of Food considers that it would be undesirable to reimpose retail price control, but the Government are actively considering an arrangement for improving marketing and distribution in this field which in time should help to reduce distribution charges and so keep prices at a reasonable level.

Mr. Ellis Smith: Will my right hon. Friend also consider attaining the same result with urgent action?

Mr. Gaitskell: I assure my hon. Friend that it is our desire to press on with schemes for improving marketing and distribution and that my right hon. Friend is giving a great deal of attention to this matter. My right hon. Friend is also considering re-introducing price control for certain other groceries, such as jam and breakfast foods, so as to ensure that there is no profiteering at any stage. Effective retail price control over fish is not an easy matter. That must be understood, but my right hon. Friend will be prepared to introduce a scheme of full price control in the autumn unless the level of supplies and prices makes it unnecessary.
Although it would be wrong to think that the measures I have just enumerated are likely to bring about any significant reduction in the retail price index, they will, I hope, ensure that over a very wide range of commodities the prices charged do not rise by more than the increases in materials, wages and other costs make inevitable. The matters I have described will also be supplemented by action on resale price maintainence, on the lines recently mentioned by the President of the Board of Trade. He, I may say, is also considering certain further proposals designed to improve the efficiency of our methods of dealing with monopolies and restrictive practices.
In the course of my Budget statement, I referred very generally to credit policy. I should now like to say something more

on that subject. It is obvious enough that, in theory, unlimited expansion of credit can create a demand inflation of the most serious character. It is indeed no use our withdrawing purchasing power by draconic higher taxation if, by the back door, so to speak, large additional quantities of credit are being pumped into the system. It is generally agreed in the United States that, in the early period after Korea, credit expansion there increased demand and contributed quite materially to the rise in raw material prices. This policy in the United States has now been modified with marked effect.
In this country, as I said on an earlier occasion, the expansion or contraction of credit is not likely to affect the prices we have to pay for raw materials, for the simple reason that we are a very much less important buyer than America, but it can influence the level of investment here. Since more money spent on investments generates income for consumers but not things which they can buy, investment financed through bank advances not offset by equivalent saving is clearly inflationary.
The most important index is the level of bank advances. These have been rising during the past year by about 10 per cent., as compared with the previous year. I do not think that is surprising, in view of the higher prices of imported materials and other cost increases, but nevertheless I consider that the time has now come for a rather tighter check to be imposed. The very fact that the pressure for increased facilities for essential purposes, particularly re-armament and exports, is likely to expand, makes it necessary for us to ensure that other types of spending out of credit should be even more effectively discouraged.
It has been suggested sometimes that every tightening of credit control requires an increase in the short-term rates of interest which the Government pay to the banking system and the money market. I do not agree with this. A rise of even ½. per cent. in the charge on the floating debt would involve a gross additional charge to the Exchequer of not less than £30 million a year. After allowing for the increased tax revenue, the increase would still be £16 million. I could only agree to a step of this kind, which has to be met by taxation and which will conflict


sharply with the efforts we have been making to keep down public expenditure in the country, if it were the only way to check an increase in bank credit.
It is by no means clear that a rise in Treasury bill rates would of itself have much effect on the volume of credit, and still less clear that it is necessary to achieve the desired result. The argument is, as I understand it, that unless the Treasury bill rate is allowed to rise, the banking system can always replenish its funds by selling Treasury bills to the Bank of England without loss, thus continuing to expand advances at will.
If the clearing banks were acting entirely on their own and without regard to the national interest there might be something in this argument, but the clearing banks have for many years accepted that, in matters of credit policy, it is their duty to co-operate with the Government. I have no reason to suppose that they would not be prepared at our request to keep the level of advances in check, even if they were spared the uncertainty which these commentators suggest would result from not knowing the rate at which they can discount Treasury bills.
I should add that my objections to a rise in rates for short-term Government borrowing, with the imposition on the Budget that it involves, do not apply to commercial bills and advances, the rates for which have recently risen slightly. The important thing is that, without increasing the burden on the Exchequer unnecessarily, the level of advances should not be allowed to expand at a rate which produces inflationary consequences internally, and that the banks should be particularly careful in lending to ensure that the purpose of the loan coincides with the national interest, for example, because it is for production or defence or export or some vital home investment.
I have explained my views on this matter to the Governor of the Bank of England and asked him to repeat with emphasis the request which my predecessors and I have addressed to the banks on credit restriction. I am glad to tell the House that the Governor has since informed me that the banks will endeavour to do their utmost to carry out the policy I have indicated to restrict any

extension of bank credit for any but essential purposes.
I value this renewed assurance of cooperation by the banking system. It is on the officials of each bank and their unique knowledge of the needs of their customers that the success of the policy must depend. It is they who, without derogating in any way from their accepted standards, will have to exercise from day to day the selection and discrimination which our present circumstances clearly demand. Should they need further guidance from the Government, which must be of a fairly general kind, I shall, of course, be willing to provide it.
I now turn to the question of profits and dividends. The House will recall that in my Budget speech I drew attention to the fact that profits had risen by nearly 14 per cent. in 1950 and were certain to rise further in 1951. I asserted that this was a movement of a fairly general kind, not so much associated with any particular improvement in efficiency or managerial skill as the consequence of much wider world events. I said that was one very good reason for imposing heavier taxation on profits; in doing this in the Budget, I made it plain that I wished to discourage companies from increasing their dividend distribution so that they should put the maximum to reserve.
Since then I have from time to time reported to the House the movements of dividends, and I have made it plain that I was disturbed by the continuing increase over last year. It is true that for the months of April and May the rate of increase over 1950 was 8½–9 per cent. compared with nearly 14 per cent. in March and 10 per cent. in January and February. But in June I am sorry to tell the House that the rate of increase rose to very nearly 14 per cent. These figures are net after deduction of Income Tax. If one allows for the increase in the rate of Income Tax made in the Budget, the increases for April, May and June are 10.5, 13 and over 18 per cent.

Mr. Oliver Lyttelton: Has the Chancellor also taken into account the increased capital which has been used by those companies to earn those increased dividends?

Mr. Gaitskell: Whatever was allowed for that in the course of the year did


not justify anything like the figures which I have quoted.
Moreover, the averages conceal many individual increases on a much bigger scale. In fact, it is no exaggeration to say that practically every morning there is news of a company increasing its dividend in a pretty substantial fashion, and on a scale far greater than the general increase in money incomes which has recently been taking place. This kind of thing inevitably acts as a continual irritant on the great majority of the population who are not equity shareholders. After all, it is happening against the background of a heavy defence programme, a rise in prices largely induced from outside but none the less unpleasant for that, and a growing anxiety about our balance of payments. The psychological consequences of sharp increases in dividends are far greater than their direct monetary effect. They are a body blow to moderation in claims for higher personal incomes by wage and salary earners.
I have on more than one occasion given warning that if this movement continued we should have to consider taking further steps to deal with the situation. I have now reached the conclusion that those further steps are necessary if we are not to be continually frustrated in our efforts to check inflation and the increase in the cost of living. We have therefore decided to introduce in the autumn a measure to control dividends. A White Paper stating the essential principles of this legislation will be available in the Vote Office when I sit down. Meanwhile, I will give the House the following outline.
The control will apply to all companies, public and private. It will apply during the re-armament period which will be defined as three years for each company. It will impose a limit on the gross amount of dividends which may be distributed other than fixed rate dividends. In normal cases the limit will be the average of the dividends distributed in respect of the last two accounting periods of the company for which before 27th July, 1951, a final dividend has been paid or declared or announced.
For existing companies which have paid no dividend or an abnormally low dividend there will be an alternative standard, equivalent to 5 per cent. of the relevant capital, which means, broadly

speaking, the paid-up share capital. The control will not apply to companies distributing less than £10,000 gross a year. In the case of new companies which may need to raise more capital the standard will be 7 per cent. of the relevant capital. There will also be provision for the Treasury, in exceptional circumstances, to decide that the amount of dividend permissible may be increased. I wish to make clear, however, that this power will be exercised only in very special cases. In the great majority of cases the standards provided by the Bill must be regarded as adequate.
The limitation on dividends which we propose will reduce the pressure of demand at home not only because it will limit the amount to be distributed, but because it will also check inflation in share values following on higher dividends. But I must make it plain that I also regard it as an essential prerequisite if increases on the costs side, through higher wages and salaries, are to be effectively checked.
That brings me to the important and difficult question of wages. During the period 1945 to 1948 the wage rates in this country rose by 18 per cent. and average earnings by more than 20 per cent. During this period—the three years after the war—despite an increase in food subsidies of £200 million, there was also a rise in retail prices of about 18 per cent. From 1948 to 1950 these movements all slowed down. The increase in wage rates in that period was 5 per cent., the increase in average earnings about 9 per cent., and the increase in retail prices between 5 and 6 per cent., although there was no increase at all in the subsidies. Since last autumn there has been a much more rapid increase in wage rates, which have gone up by 8 per cent. The total increase in wage rates during the last nine months has been as great as the increase during the preceding three years.
We have often said that increases in wage rates and earnings which do no more than parallel an increase in productivity have no harmful effects on costs, because, of course, the rise in wages should be offset by the increase in productivity, so that prices do not go up at all. Recently the increases in wages have clearly far out-distanced any increase in productivity and therefore have contributed to the rise in costs and prices. The wage increases


themselves, I think, were partly the result of the reaction against the period of extreme wage restraint ushered in after devaluation and were, of course, still more the reaction to the higher retail prices resulting from the increase in import prices.
It is as well that we should consider the implications of this development. When only one section of the workers obtain a wage increase, obviously that for the time being must improve their position as against that of the rest of the community, including other wage earners. It is sometimes supposed that when all wage earners in different occupations have increases, these are all cancelled out by price increases and nobody is any better off. That is not strictly true. The rising wages involve a transfer of real income from those whose incomes are fixed in money terms to the wage earners and if in consequence, as undoubtedly frequently happens, profits rise too, also a transfer to those who receive them.
The great danger, I think, of a wage or cost inflation of this kind is that if it proceeds at too violent a rate it threatens the stability of the whole economy. People begin to believe that prices are going to continue to rise. This leads to less saving and more spending and so to higher prices, and at the same time again we have the phenomenon of the pull of the home market and the diversion to the home market of goods we ought to be exporting to pay for imports.
Nor can we ignore two other dangers. First, there may be further serious consequences to the balance of payments if the rise in wages in the export trades puts our costs at a level which makes it difficult or impossible for us to compete abroad. This was in fact the major danger when my predecessor originally introduced and sought the collaboration of the T.U.C. on the policy generally known as wage restraint. I do not think that until recently that danger has been anything like so serious as it was earlier. Indeed, it has frequently been argued that in present circumstances it would be right for the prices of our exports to rise. I must, however, give this warning, that the time may not be far distant when this danger will again become a serious one, particularly in the light of

certain forecasts I made a little time ago and particularly in certain industries.
Secondly, the arbitrary re-distribution of income which is involved in inflationary movements of this kind necessarily creates strains and stresses within society' which can be seriously disruptive in their consequences. It is always our duty to fight against this, and it is certainly the last thing we want at a time when all our energies should be devoted to making ourselves secure and maintaining our position in world trade.
What, then, is the conclusion of the analysis? The trade union leaders made great efforts in difficult circumstances to pursue a policy of restraint which we all agree contributed very greatly to our national recovery; but they made it plain that they could not continue the policy of extreme restraint which followed devaluation, nor do I think that this would have been possible or reasonable. On the other hand, we cannot escape the fact that a continuation of the rate of wage increases which took place during last winter might do serious damage to the stability of our economy.
I hope very much that the control of dividends and the other measures which I have announced today will help to ensure the acceptance of a policy of reasonable restraint in the field of wages. I know it will be said that this cannot be accepted so long as prices are rising, but I have already indicated to the House that there is reason to hope that, so far as external factors are concerned, the upward movement has slowed down and may be coming to a stop. It is of the most vital importance that in these circumstances, and especially when there is a danger of a check to the rate of increase in production, the wage-price spiral which was, so to speak, set in motion by external forces last year, should not now continue of its own momentum.
This, then, completes what I am afraid has inevitably been a rather long review of the complex and difficult situation in which the country finds itself, of the prospect before us and of the policies the country should adopt. I would sum up those policies in this way.
Despite all obstacles, we must strive to go on paying our way as a nation, particularly by pushing up the volume of our exports and economising in imports


where we can. Because of the urgent needs to divert resources to defence and exports, we must keep down expenditure at home, and from this I certainly do not exclude those parts of Government expenditure in which economies can reasonably be sought. We must take every possible step to avoid adding to the rise in costs and prices which world inflation has imposed upon us.
We must use our scarce materials—particularly steel and the others I have mentioned—as economically as possible and to the best effect. And at a time when the demand for manpower will intensify, we must ensure—I make this special appeal to employers that no labour is retained in any quarter unnecessarily. Finally, as always, we must do what we can—despite raw material shortages there is much that we can do to increase productivity, especially where it matters most.
The measures of Government policy which I have announced are intended to support this programme and to attack the obstacles to its achievement, especially the achievement of greater economic stability. I have explained our reasons for adopting certain measures and our reasons for not adopting some others, tempting though they may be. The situation we have to face represents one more in the ever-changing series of problems with which international post-war developments have presented us. We have made our forecasts as best we can. Should matters take another turn, we must be ready to adapt our policies accordingly; but for this next phase, and on the basis of the most balanced estimate I can make, I believe our policies are essentially right and I commend them accordingly to the House and the country.

5.2 p.m.

Mr. Oliver Lyttelton: I must say at the outset that this House has had to put up with something in the methods by which the Government have dealt with these economic subjects. After all, it is only three months ago since we debated the Economic Survey and the Budget for 1951. Yet, already we are having another economic debate on new figures, and further pronouncements on economic policy and the economic situation have come from the Chancellor.
On 21st June, the right hon. Gentleman made one important statement upon capital investment which was not debatable and which carried wide implications with it. That statement alone will have a serious impact on the national life, and it seemed to many of us at the time that the material in that statement did not lend itself readily to a statement made after Questions. There were several hon. Members below the gangway opposite who shared my views.
Then, we had the usual statement on the gold and dollar reserves made on 4th July. I am not complaining of that, but it showed the great deterioration in our balance of payments and the mounting fears of huge deficits on international account. The third statement is the one to which we have just listened. I derive little comfort from the thought that within three months of the Budget, economic statements of such wide and grave import have had to be made. It gives us the clear impression that events dominate the Government, and how little economic trends are predicted for all the economic surveys and forecasts.
The Chancellor, in the course of his speech, tried to whitewash the Economic Survey and the forecasts, but failed to do so. I am only going to give one instance. Upon the fundamental figures of the balance of our trade, the Economic Survey, published not long ago, has turned out to be a wild and, for that matter, unsuccessful guess. Our exports are running at about £142 million a year below the estimate, and the rise in import prices—we have heard the confession from the Chancellor today—has been admittedly much steeper than was calculated at the time. According to recent Government estimates, imports are now running at about £200 million to £250 million above the estimates in those forecasts.
I expect it is unnecessary for me at this hour to emphasise to the House the danger in life of starting upon a number of false assumptions and then erecting a number of policies upon them. So I suppose we must accept the need for starting again and recognising that the previous figures were wrong.
Before I get on to another matter, I should like to mention in passing that in the course of some remarks, which were as vulgar as they were offensive to


my right hon. Friend the Member for Woodford (Mr. Churchill), the Chancellor made some observations about the effect of devaluation upon the rise in prices. But, of course, before the dollar increases were made our own prices had already risen as a result of devaluation. Therefore, the additional rises come on to a higher basis than they otherwise would. Any increase in prices which has taken place since devaluation is partly due to devaluation, and I recommend the right hon. Gentleman to make little less of a special plea before indulging in these rather offensive remarks.
I next want to draw the attention of the House to a fact which was not at all clear from the speech of the Chancellor, namely, that he was moving a Motion. The right hon. Gentleman did not refer to the Motion in the course of his speech —only at the end. I must say, before I come to discuss the subject, that this Motion appears to me to be couched with extraordinary naÏveté. It begins like this:
 That this House, recognising the dangers of uncontrolled inflation to the defence programme"—
I would add that, in my innocence, I thought that in a country of planners inflation had to be controlled by the Government, or am I wrong? Apparently not. And yet this House here is asked
to recognise the dangers of uncontrolled inflation to the defence programme.
Might I suggest a little redrafting here? Would it not have been better to have said that "recognising that inflation under the present Government is becoming uncontrolled, this House draws attention to the dangers to the defence programme"? Then the Motion goes on:
urges that every effort be made, both through international action and internal measures, to check the rise in costs and prices and limit the pressure of excessive demand.
Urges whom? Would it be the Opposition through whom this international action is to be taken? If not, it seems to be a piece of self-exhortation, a new weapon in the already large armoury of Government exhortations. I studied this Motion, as it was my duty to do, with great care. My conclusion is that it is a self-inflicted wound, and I have now to ask the Government whether they regard this Motion as a vote of censure. If so, I should like to know what attitude the

party opposite proposes to adopt towards it. Be that as it may, I must now plunge more particularly into the subject.

Mr. Collick: Hear, hear.

Mr. Lyttelton: Exactly. Government Motions are generally considered to be part of the subject, but I quite agree that, after listening to the speech of the Chancellor, the hon. Member might have thought otherwise. It was, therefore, necessary for me—and I make no apology whatever for doing so—to discuss the terms of the Government Motion which is the subject of this debate. There are other considerations.
First, from these benches we have had frequently to emphasise the unpalatable fact that to re-arm on a sufficient scale to be safe, to export on a sufficient scale to be solvent, to consume on a sufficient scale to be comfortable, and to enjoy and maintain social services on a sufficient scale to be secure upon the present scale of working hours and productivity is beyond us.
During the Budget debate my right hon. and learned Friend the Member for Montgomery (Mr. C. Davies) said cogently that we were obviously trying to do too many desirable things at once. Faced by those facts, the right hon. Gentleman the Member for Ebbw Vale (Mr. A. Bevan) and his school of porpoises playing round the ship found a ready solution. They said the facts did not exist; that the Russian Bear is not a big black bear at all, but is only a koala bear; that we need not re-arm on the scale suggested. There was a day when the right hon. Member for Ebbw Vale would have added exports to the list of unnecessary effort. In a remarkable book called "Why Not Trust The Tories?" he wrote these words:
By some twist of the Tory mind, it is good to persuade someone in a remote part of the world to buy our goods.
Of course, to repeat these things, and to say that exports are a figment of the Tories, would be highly embarrassing to his associates now, because since the right hon. Gentleman wrote these words he has gathered to his Parliamentary and political bosom the right hon. Member for Huyton (Mr. H. Wilson), who has rightly spent so much of his recent years in underlining the necessities for exports, so that one had to go out. The only thing that was left was to say that the effort upon defence


was much too great. Well, that was the argument that had to be dished out. if the social services, the standard of life and exports are to be maintained, then rearmament and national safety must become the residuary legatee.
To be fair, of course, a large number of hon. Members opposite, headed by the Chancellor, will have nothing to do with these arguments at all. But that does not do very much to meet the dilemma or answer the problem. Their answer to the three questions is admittedly different from that of the right hon. Member for Ebbw Vale. They asked themselves: What has to give way? Has it to be re-armament and national safety? No. Is it to be exports and international solvency? No. Is it to be the consumer and consumption at home, and the social services? The answer is "Yes." That is the plain fact that we cannot get away from.
In passing, I would remind the House that the present Government have already cut the social services very drastically by the fall in the purchasing power of money and one or two changes in charges, about which hon. Members opposite do not seem to be wholly agreed. There has been a cut of over 5s. in the £1 in the social services—over 25 per cent. In other words, the contribution made by those who have not yet drawn benefits will decline by that amount. But, even after all these cuts the dilemma remains unsolved, and before going any further I must now turn aside for a moment to say something of the form in which the present crisis appears.
I have no desire to keep the House too long, but I think that the Chancellor was not quite expansive enough on these subjects, because, of course, events have once again overtaken the Government. The facts have come to light. Cantering inflation is now beginning to gallop, and a serious disaster in our balance of payments is not impossible. I do not want to overstate it, but a serious disaster really does appear to be looming on the horizon. On the one hand the public at home, who are frightened by the steady rise in prices, have tried to guard themselves against further rises by buying in anticipation. That always happens in an inflation.
In the first quarter of 1951—the Chancellor referred to a percentage, but I

prefer the stark figures—personal spending was £200 million higher than in the same period for 1950. He said that the rise in personal consumption was 5 per cent.

Mr. Gaitskell: In real terms.

Mr. Lyttelton: Then we have to consider at this stage the effect upon savings. The interest rate paid by the Government has been increased, but for the first. 15 weeks of this year there is a savings deficit of some £34 million compared with £35 million in the comparable period last year, when the rate of interest was lower. Now the increase in personal consumption of £200 million in the first quarter of 1951 and the continued deficit in savings hardly reflects much of a testimonial in the confidence felt by the public in the stability of the pound sterling or in the price level. Amongst other things, these figures show the inevitable failure of a policy which tries to take 8s. in the £ in tax out of every £1 earned in the country, and at the same time to finance itself out of an increase in personal savings.
Then there has been a very startling deterioration in the balance of payments. I need not go over the figures again. It really would be truly disastrous if visible trade only were involved to which I shall refer. The largest deficit in our visible trade, was, I think, about £425 million, in 1947. In the six months of this year the deficit in visible trade has already been £350 million, so that in a half year we are already 80 per cent. of the way towards reaching the worst figures that we have ever been on the wrong side since 1946: In six months we have a deficit of £350 million compared with our worst year, of £425 million in 1947.

Mr. Jenkins: The right hon. Gentleman is surely not suggesting that the invisible position now bears any relation to the position in 1946 and 1947. Therefore, to suggest that the figures he gives are a true indication of the position is surely not tenable.

Mr. Lyttelton: The hon. Gentleman interrupts with all the agreeable impetuosity of youth, but he really must allow me to develop my argument. I began this particular passage by saying that visible trade only was concerned. I


am now coming to the subject of invisible trade. As one of mature years, I deplore this impetuosity of youth, although on this occasion I did not feel obliged to check it.
But visible trade is not all, and I now want to examine invisible exports. We changed from a minus of £120 million in 1947 to a plus of £177 million in 1948, £183 million in 1949, and £382 million in 1950. The Economic Survey estimated that in 1951 invisibles would reach £450 million, which the Chancellor has now revised, upon all the other figures, to £400 million. I shall have something to say about that later. I pray that we reach even the revised figure of £400 million, but if we look at the gross figure—those that I have been giving are net figures—of invisible exports, that is of about £900 million, we find amongst the credits are £315 million under the overcoat heading of "Other."
There was a Question on the Order Paper today about this. We have asked frequently that this figure should be analysed, but we understand that it is due largely to the earnings of British-owned oil companies abroad. Therefore, this figure is likely already to have been seriously affected by the Persian crisis. Is the £50 million due to that fact? Can we have some analysis of why the figure of £450 million is now revised to £400 million? I should like the Government to give us what is rather infelicitously called "a break-down" of the heading "Other" during the course of this debate.
The first point which emerges is the great importance of invisible exports, which I hope the right hon. Gentleman is now impressing upon his hon. Friend. We should like to see much more encouragement and much less discouragement of invisible exports than the Government are showing. I said the other day that the Government were positively hostile to invisible exports, and the hon. Member for Wednesbury (Mr. S. N. Evans), I think it was, demurred.
But of course, inconvertibility, bulk purchase, the closing down of free markets like the Liverpool Cotton Exchange, now a statutory limitation on dividends, the excessive stamp tax on Stock Exchange transactions which drives foreigners to use other markets, the threat to nationalise insurance, and the

silly clause about fines for change of domicile in the Finance Bill this year—all these reduce invisible exports far below what they might be. They drive business away. I will not discuss the subject further, but I refer hon. Members interested who seek confirmation of these views to a memorandum of the British Bankers' Association.
Bad as the situation is—and I do pray we have seen the worst of it—on the balance of payments I think the most serious feature of the present crisis relates to quite another aspect of the subject, on which I must touch particularly as the Chancellor has not touched on it at all.
Despite our huge deficit of visible trade, and certainly I suppose a very large deficit on our total trade, the gold and dollar reserves of the sterling area, treated as a whole, have increased from 9,758 million dollars at 31st March to 3,867 million dollars at 30th June. This means that although the United Kingdom is heavily in deficit, the sterling area has made up these deficits and produced an overall surplus. Our deficit has in fact been financed by the rest of the sterling area. Consequently, we have had the advantage during this period of a large volume of unrequited imports.
The phrase "unrequited imports" is, I think, a very happy one and is the phrase of my right hon. Friend the Member for Ormskirk (Sir A. Salter). Unrequited imports are highly deflationary because they suck up and absorb purchasing power on the one side while on the other they are not paid for and so the extent of the inflation with which we are faced, and to which the Government draws attention in the Motion, is concealed by large imports. part of which we have not paid for at all.
It is not always understood that imports and exports, visible and invisible, are brought into equilibrium that this adds to the inflationary pressure further from the pressure at which it now stands. But it is undeniable that the United Kingdom unfavourable balance is being financed by an increase in her sterling debts to other members of the sterling area, and I cannot do otherwise than express great fears about this movement.
We are, after all, the bankers of the sterling area and must never lose sight of


the fact that there must be some limit set by our customers to the accumulation of sterling balances in their favour and that applies both to the amount and to the period of their willingness to finance us by increasing our indebtedness to them.
I do not know what the increase in sterling liabilities has been. We are without the figure, but it is highly significant that the Australian overseas balances, which are mostly held in London, increased from £567 million at the end of 1950 to £713 million on 4th July, 1951. I do not want to be alarmist, but when these sort of movements are occurring and Sterling Area Conferences are to be held in Washington I become frightened. I am afraid, if the present trend cannot be reversed, of the whole of the sterling arrangements falling to pieces.
I was a little surprised in the course of the speech of the Chancellor to find that he was giving the same emphasis as only a few months ago, although everything else had changed, to the concentration on dollar exports. I am not at all sure that we are not over concentrating on dollar exports and should not stimulate a little more exports to the rest of the sterling area. I had a sort of feeling that, like so much of the Economic Survey, this policy may be already a little out-of-date. I hope the Government will look into this matter of concentration on dollar exports again.
I must come to the subject of Government policy to deal with this crisis. Of course, a short summary of Government policy announced by the Chancellor of the Exchequer today is that they have none. They intend to re-hash a few little price controls which have extremely little effect on the situation and to write the same letter, and underline it in red ink, which they wrote to the bankers before about credit restriction. They are going to introduce statutory limitation of dividends which, as I shall show, has extraordinarily little effect on inflationary pressure.
The House will have noticed that in the course of his remarks about limitation of dividends the right hon. Gentleman made this genuflexion to honesty—he said that of course the effects of this would be psychological. When we get a Chancellor of the Exchequer saying that particular measures are psychological, it is

equivalent to saying that they cannot be supported by any argument related to figures. I shall have something to say about limitation of dividends. We must study the White Paper and see how it is to work.
I wish to turn aside at this moment to mention that it will have no effect whatever, nor will any of the other measures, on the major questions which now face the country. These are little counter-irritants and smoke screens put up to disguise the failure of the Government to run our affairs properly.
Faced by the dilemma of what is to give way, I suppose the policy of the Chancellor is something like this: First a reduction, by an unspecified amount, in civilian capital investment. We are to have fewer houses, no office buildings, fewer machine tools, fewer plant extensions and so forth. Secondly, there is to be a reduction in personal expenditure and consumption by the public—I emphasise that. Thirdly, there are further exhortations to keep wages and salaries down and some little price control and statutory limitation of dividends.
Fourthly, there are some fulminations against paper profits and dividends, which form so large a part of the Chancellor's revenue. Of course, paper profits are always too high in an inflation, but true profits, after reduction of 60 per cent. in taxation, are today too low to maintain our industrial position. I say that without any doubt whatever and it is well to remember that high prices make high paper profits, but high paper profits do not make high prices.
It may well be that after a long period of abstinence from increased dividends and a long period of following requests by the Chancellor—which have had no statutory backing at all—they are being rewarded by statutory limitation and it may be that some companies do not realise how much their industrial capital is being depleted and how much their profits are due to increases in the value of the stock upon which they are trading. But the Chancellor has already used a powerful fiscal weapon to deter companies from increasing dividends above the present level.
I feel therefore that when a full realisation of the depletion of industrial capital


becomes clear, we shall see no such increase in dividends as will do anything more than add a peppercorn to inflationary pressure. We all recognise that this is a necessary counter-irritant or smoke screen, but I cannot let the right hon. Gentleman get away with it without analysing the figures.
In 1947 company dividends—and when we are talking about dividends we have to get away from profits like those earned by farmers or sole partnerships— amounted to £824 million, and in 1950 to £827 million, an increase of £3 million in distributed dividends. Wages, during the same period, rose by £940 million, compared with £3 million. Turning to the year 1951, the figures for 1,703 industrial companies which have already published reports in the first six months show that the payment of dividends rose from £79 million in the first six months of 1950, to £87 million in the first six months of 1951, a rise of about £8 million, or about 10 per cent. However, during the year the capital employed by these companies increased from £2,343 million to £2,717 million, which is an increase of 16 per cent.
Whenever the Chancellor analyses dividends he is always carefully silent about the fact that the companies may have increased the capital they are using. That increase in dividends disburses £8 million or 10 per cent. But in 1951 the increase in wages amounted to about £2,463,000 a week between January and May, and I calculate that that represents an addition to the national wage Bill of about £130 million to £140 million a year. Hon. Members opposite must not think that I am quoting these figures in order to attack a rise in wages. That is not my purpose. It is my purpose to show how little the increase in dividends means in the inflationary problem compared with the rise in wages.
The Chancellor, faced by these facts, takes refuge in the old way of talking about psychological reasons. I think that is about the best case that he is likely to be able to put up on this particular programme. He has to recognise, although he has stuck manfully of late with his own party, that on this occasion he has beaten a rather shabby retreat. The keystones of Socialist planning in this dilemma are to reduce capital investment,

further sacrifices by the consumer, housewives, and the public, price control, resale price maintenance and so on.
I must say a word about capital investment. It will be universally agreed that increased production and increased productivity should be the first and most important object of our policy. I am not arguing but am trying to state an axiom when I say that there are only three ways in which it can be done, two of them much less desirable than the other. The first and most desirable is increased mechanisation, putting more industrial power behind the worker at the bench, increasing the number of machine tools, to improve layout and add more mechanical handling.
That is the best way towards a solution of our problem, but, of course, it is a fact and eroded by the statement—and to be quite fair to him I think the Chancellor disliked having to make it—concerning the reductions which were unspecified but which are sure to be large, in the civilian investment programme for 1951 and onwards. This reduction will strike at the roots of our future prosperity as an industrial nation, although perhaps its defects will be fairly slow to be seen.
The second way to increase production is to work harder in existing working hours. That is largely a psychological matter. Harder work in working hours comes, firstly, through a moral impulse like patriotism, the belief that the country is in a jam and everybody has got to help. I must add here that this impulse is very much checked by complacent Government statements that are made between recurrent crises or during those periods when, in the words of an ex-Chancellor, the Government are moving from one expedient to another.
Harder work in working hours is also helped by material incentives—to be able to keep and spend a reasonable part of one's earnings and to be able to spend it on a wider range of goods. Increased taxation with rising prices and new restrictions on consumption are unfortunately all in the other direction and a further attack upon material incentives.
The third way to increase production is to work longer hours. No one wants to see this applied, but to the extent which the other two means are not followed—and they are being attacked by the reduc


tion in capital investment—we shall be driven back on this third way, or our problem remains unsolved
The other keystone of Socialist policy is to reduce personal consumption. This was to be done partly by rationing of the purse but it has been ineffective during 1951. There is no doubt that our position as a nation in this dilemma can be very greatly improved by greater austerity on the consumer. We must never forget that during the war we achieved the highest industrial output which we had ever achieved up to then with half the imports of 1939. Those figures seem almost incredible, but they represent sacrifices in personal consumption. There is no doubt about it if we are prepared to knock the consumer about enough and keep everything where it is, we may possibly be able to balance the account.
What about price control, which is probably the only substantial measure which the Chancellor has discussed today? The fundamental difference between the policy which we on these benches would pursue and that pursued by the Government can be shortly stated. The Government do not make real efforts to restrict the amount of money in circulation, even though the unemployment figures are now down to a point where they do nothing other than emphasise the immobility of labour.
The Government allow the creation of ever more credit and money in circulation, and they are insensitive to any use of the interest weapon. We saw this afternoon the Chancellor shy away from this, and produce some extremely thin arguments for his theory. All the Government have done to check interest is to send that old letter, which has been written to the banks several times in the last few years. That is all they are doing to check the amount of money which is in circulation. This is like whistling into a thunderstorm and expecting the sky to clear.
Price control—and I myself introduced a price control Bill during the war—depends upon all the other economic measures having been taken. Many of these are inapplicable in peace-time but while there are price controls and while leaving the volume of money largely un-checked, the system will break down as it has nearly always done in every country

where it has been applied. It would be out of place to go into the technicalities of the subject, but those who are concerned with this subject know that it is designation of the goods controlled which generally breaks down the system. I do not think we are going to get very much out of it in spite of what the Chancellor said.
I should like to draw the attention of the Committee to a rather interesting passage in the Report of the Bank for International Settlements which deals with this very question. It says:
Credit measures have a great advantage in flexibility, that is, they can be stiffened and relaxed according to changing circumstances far more easily than physical controls. A perhaps minor but not quite insignificant consideration"—
certainly it would not be insignificant in this country—
is that changes in interest rates involve little or no administrative and other costs, while measures of direct control are expensive in both money and men to the administration and to the industries, etc., which have to comply with official requirements.
I do not attempt to disguise the fact that reduced personal consumption is now going to be necessary if we are to re-arm and export on the necessary scale, but it is just as well that the country should know and should be told where they have been led during the last six years. We have spent so freely that when the emergency arose we had no reserves to fall back upon, and there is no way out of the dilemma except by a new policy and a new Government. We shall have to abandon many features of the planned economy or so-called planned economy under which we are now suffering. We will have to see the Economic Survey put out in rather a different form.
The selection of priorities for national production will have to be helped by some use of the price mechanism and the rate of interest. Wage freezes have broken down; the control of prices will surely break down under inflationary pressure. All the experience I have had shows that the price control of prices can only act as the chevaux de friseon the top of the wall already built. The nationalised industries must be looked at. They now form a large part of the national economy. They require drastic re-organisation.
We heard something about the costs of distribution today. I think that it is


right that the Government should be wary about that. One of the reasons for the increase in the costs of distribution is the increased cost of these nationalised services like transport. When one eats cod or haddock, one is actually eating a good deal of freight. I do not think that the Government will get much out of cuts in the costs of distribution, but I think that it is right to be wary about this matter.
This problem must be attacked upon all fronts. The road to safety lies in positive measures—increased production. increased incentive, more individual freedom, more invisible exports, less Government expenditure and, of course, some restriction of the credit foundation. These measures must be very carefully timed: they cannot be effective at once. It is positive measures that we want, not negative ones. We get nowhere with things like limitations of dividends.
Reduced consumption is a present necessity. We have to keep in mind high wages and high production. Wage freezes are against that idea. That change—and it is a fundamental one—will never take place under this Government. It will take two or three years of careful management by the next Government before we see many results. There are no quick or easy solutions. We can regard with some equanimity the legislative Measures which the Government intend to introduce in the autumn. There are no quick and easy solutions. No single Measure can be effective.
It is astonishing how in human affairs things begin to right themselves when something is done right, and when negative and mistaken policies are discarded and positive and sound ones are put in their place. I emphasise that the time to start upon these measures is now. Nothing we heard this afternoon gave me any confidence that the Government will not vote for their own Motion and confess that it would have been better drafted if, at the end, it had said,
and admit their inability to manage the country's affairs efficiently.

5.43 p.m.

Mr. Grimond: Two of the Chancellor's main proposals were an extension of price control and a limitation on distributed profits. My first comment on these proposals is that I do not see that they will have any relevance to what I regard as possibly

the most serious immediate problem which faces us, and that is the problem of our overseas balances. I do not think that the Chancellor pretended that they will help at all in the solution of that problem. In so far as price control is effective, and therefore tends to increase demand for certain goods in the home market, he may actually find it tending against the policy which he wants to pursue in increasing exports.
As for price control, it is not a new policy or a new principle. It is generally accepted that, for certain essential goods, it has played a useful part in our economy. I doubt if anyone will oppose it as such. But as the right hon. Gentleman for Aldershot (Mr. Lyttelton) said, it can only be effective if it is part and parcel of a wider policy, and an essential of that policy must be that steps be taken to draw off the inflationary pressure. Otherwise, all price control will do will be to divert the inflationary pressure from one part of the economy to another.
It is unfortunate that distributed profits should have risen at a time of re-armament. The right hon. Gentleman the Member for Aldershot picked on the fact that the Chancellor had spoken of this largely as a psychological weapon—a weapon in psychological warfare. Of course, it is obvious that it is that. The Chancellor knows as well as anyone that profits are only 13 per cent. of salaries and wages put together.
As a purely economic measure, this is really not of great importance, but I thought that the right hon. Gentleman the Member for Aldershot went too far in discounting the psychological importance of increased profits at present. I think it is accepted that these debates must today spread outside the pure economic field, and, in any case, I think that psychology is of great importance in economics. A steep increase in distributed profits at a time like this, though perhaps technically unimportant, may have important repercussions throughout the economy.
I have not been able to see the White Paper and, not unnaturally, one wants to see what exactly is proposed. Three questions occur to my mind at once. First, is the Chancellor certain that he will not discourage the production of risk capital unduly? That is a matter which affects not only the capitalist but the worker and everyone else in the country. Second, how.


will the Chancellor deal with companies which, in the past, have heeded the exhortations of his predecessor and himself? How is he to be sure that they will not be penalised, as I am sure that he would not want to penalise them?
Third, what is to happen to foreign capital? One of the encouraging steps since the war is that a considerable number of American firms have started business in this country. I am not clear how they will be affected, but it seems to me that the effects might be serious. It also seems possible that there may be a tendency for capital to try to escape from this country. I do not know how the Chancellor will deal with these matters. At first sight, they seem to be of some importance.
There is also the question of the effect of these measures on the Revenue. When the Chancellor was talking of any possibility of raising the interest rate for short-term bills, he was careful to point out that if an extra charge is thereby put on the Government, there must be extra revenue. Will he not lose some revenue by this limitation on profits? If so, is he going to take steps to make that good?
Today, we live in a mixed economy. We all agree that profits, and all that goes with them, are an essential of the economy at present. It is a great pity that we have not in this House a really thorough-going Marxist. Then people like myself and the Chancellor, who are in different positions in the middle of the road, would know where the limits of the road are. We have the hon. Member for Orpington (Sir W. Smithers) on one side, but we have no one on the opposite verge.
The Motion before us recognises the danger of uncontrolled inflation. I welcome that because there have been signs in the past that when uncontrolled inflation came our way the Government were inclined not to recognise it. They pretended that they had never seen it, they called it something else. There is no doubt that the rise in prices is cutting like a razor into wages, pensions and even the pounds, shillings and pence in people's pockets. We welcome the steps taken to increase pensions, and so on. Nevertheless, the rise in prices is causing very great hardship. But while we recognise

these cruel hardships, it is also important not to exaggerate, because in economic matters the temper of the people is most important. It is not our business to flay them with blood curdling stories of the possibility of rampant inflation in this country.
It seems to me one of the unsolved problems of modern planning that the slightest change in the economic wind raises a political hurricane. We must recognise that there will always be shifts, and that prices will always be rising or falling, at any rate in my lifetime. The planners must get used to it. We cannot have a budget every two or three months. Indeed, I do not think that we can really afford these bi-annual crises. We must get back to some method of more impartial and automatic adjustment in the economy.
What is the danger? Surely the danger is that prices will rise so far that there will be a loss of confidence, that the bonds of society will be seriously loosened and that people with fixed incomes and low wages will find the situation intolerable. That is the danger, and it is a future danger. The danger is not a slow decline in the value of the £, or a slight rise in prices, because let us face it, we are not going to see a great increase in the value of the £ in the near future, and we are not going to see a big fall in prices. We should be deluding ourselves and the country if we held out that possibility.
The problem is how to limit rising prices to 2 per cent. or 3 per cent, as against 15 per cent. per annum. I have no new philosophy on this question. There are only two ways in which we can do it, one by increasing production, and the other by reducing the amount of money and credit in circulation. An increase in production has got to remain at all times our main goal, and some of us think that more attention should be paid to it.
We would like to see an economic policy on the following lines. First, including a taxation system bearing less heavily on overtime and extra work and less deterrent. Second, laying great emphasis on co-operation between the different sides of industry and encouraging for instance profit sharing schemes by a tax rebate system. Third, the


destruction of monopolies, and in this connection, I was glad to hear the Chancellor give a promise of legislation in that direction.
Fourth, if we are to find these goods for the re-armament programme, the people have a choice. They have either got to accept lower standards or work harder. We believe that they would choose to work harder to maintain their living standards, and we would welcome any steps in that direction.
Therefore, we welcome the action that has been taken by certain trade unions, for instance, to accept dilutees and to abolish restrictive practices, and we hope that the Government will do all they can to encourage that movement, and to root out these practices, both on the management and the labour side. Fifth, even in this difficult situation, we have to keep our eyes on the need for capital creation, because unless we keep up the amount of capital per worker, we will not get the extra production.
But increases in production are, to my mind, very largely relevant to the long term, and I think that we must not exaggerate the possibility of meeting our immediate difficulties by a great increase in production. We see that production has risen in this country by 4 per cent. per annum, and I think that that is about double the average rise over the last hundred years. I think the American figure now runs about 5 per cent. for this year—much the same—and her re-armament programme, bearing in mind the different size of the two countries, is comparable with our own.
When we are changing over from civilian to armament production, we cannot expect very much more than we are now getting, but, in the longer term, we should not be satisfied with that, and, as we will have to bear this armament programme for many years, we shall have to think very hard about stepping up this rise in production. I do not think that we shall succeed in doing very much over the whole field, and certainly not enough to make up for the whole programme, but it seems to me that we should concentrate on selected industries, among these being obviously the export and arms industries.
For example, if we could get the 5 million or 10 million extra tons of coal that we need, it would be of immense fillip

to our economy, and, if we could also export some coal, to that of Europe. It would be well worth while concentrating on particular industries and providing incentives in it.
In the short-term, if we are really serious about limiting rises in prices, we have to take steps to limit and restrict the amount of credit at home and also to make the best and cheapest possible arrangements for the buying of our raw materials abroad. There is no other method. If we allow the increase in the volume of money to continue, prices, naturally, will continue to rise. Price control has been put forward as a weapon but, unless the volume of money and credit decreases, we are merly shifting the burden from one part of the economy to another. I do not regard price control and credit restriction as alternative policies but as complementary.
In the early stages of the debates on the Finance Bill, it was assumed that the inflationary gap would be one of about £150 million. I think the hon. Members for Chippenham (Mr. Eccles) and Scarborough and Whitby (Mr. Spearman) later held the view that it was larger. I think it is now proving to be much larger. I think that, owing to the lag in savings, increased velocity of circulation—a subject which is seldom mentioned—and increasing bank advances, there is a real danger of serious inflation, although, possibly not immediately.
I must say that I do not understand why the Chancellor so firmly rejected any rise in interest rates, apart from what was said—

Mr. Gaitskell: I said that I rejected any rises in Treasury Bill rates.

Mr. Grimond: Do I understand, then, that the Chancellor does not reject the possibility of a rise in interest rates, because, if so, that is very interesting?

Mr. Gaitskell: Long-term interest rates have already risen, and I said that I raised no objection to increases in commercial rates or on advances.

Mr. Grimond: I think that both the long-term and other rates have got to rise. I believe that a rise in interest rates with its accompaniments, such as a further fall in gilt-edged securities, will set up a useful deflationary current which will freeze


off some marginal spending which we can well do without.
If we can skim off the inflationary money, I think that we should probably then require some limited but fairly drastic controls to ensure that materials are directed to vital industries and uses. I do not know whether the Chancellor is satisfied about the supply of raw materials for the re-armament and export industries, but I can imagine that we may need to stop certain types of luxury production entirely, or, alternatively, he could impose a swinging Purchase Tax to prevent those goods being bought.
The deterioration in our balance of payments due to adverse terms of trade, inflation at home and the increasing competition which we face in our export industries must give the greatest concern to everyone in this country. Again, I see no easy way out. I think we have to find means whereby we can export more and reduce inflation. Here, too, we should be selective and try to press the export of goods for which there are ready markets. It is no good looking for scapegoats or some method to "get-rich-quick" in dollars.
I am afraid that we have hanging over us these enormous sterling obligations, they have recently risen by something like £600 million. I believe that Australia alone holds some £700 million of sterling balances in this country.

Mr. Gaitskell: The gold reserves have also risen.

Mr. Grimond: Certainly, but, eventually, we shall have demands made upon us for our gold, our dollars or our goods, and already our insufficient resources are mortgaged to fulfil these obligations. I would say to those people who think that there is only "one way ahead" that, if they attach great importance to raising the standard of life in the backward areas, that must mean investment in those backward areas. Let us not forget that we have the most appalling obligations in supplying dollars or goods to a great many existing creditors, and that so long as that situation exists the backward areas must come some way down the list.
I think it is a mistake to think there are short cuts in these matters. It is attractive to believe that revaluation, or an

exchange rate swinging between two points backed by a stabilisation fund, would help. Eventually, I hope, we shall get back to freer exchanges, but I do not believe that, in our present economic circumstances, and under our present system, we should alter the exchange rates. We cannot always be jiggering the £ about every 12 months or so. We cannot start to redraft the Budget before the present Finance Bill is on the Statute Book. Therefore, for the time being, I think we have to accept the value of the £.
To my mind, it is only by controlling monetary inflation at home by well-tried methods, by building up production on a long-term basis, and by producing the right goods for the right customers that we can hope to meet the dangers of inflation spoken of in this Motion or, in the long run, discharge our financial obligation to the world.

6.0 p.m.

Mr. Jenkins: The hon. Member for Orkney and Shetland (Mr. Grimond) has made an interesting and moderate speech, as he always does, and I think we all sympathised with him in the rather unusual and disconcerting interruptions to which he was subjected at one stage in his speech.
The hon. Member told us early in his remarks that he did not see what this measure of dividend limitation—which I was very glad to hear my right hon. Friend announce this afternoon—had to do with the question of the foreign balance. I think it may make a contribution in so far as it helps us to stabilise the price level here at home, and I shall have something to say about that later.
We had a speech from the right hon. Member for Aldershot (Mr. Lyttelton). I interrupted him at one stage in that speech and he accused me of the impetuosity of youth. I thought he showed the sagacity of age in that he criticised my right hon. Friend's proposals without at the same time telling us how he proposed to deal with the difficulties facing us. He told us that we needed an alternative Government, but that we could not expect anything from an alternative Government for two or three years. That means that on the balance of payment question and on the prices question, where, I should have thought, measures would have shown results in much less


time than that were required, he does not offer us any bright prospects for some time to come.
The two principal things which are worrying us and which are responsible for this debate today are quite closely associated with each other. They are the deterioration in our balance of payments and the rapid rise in prices which has been taking place at home. As I say, these things are closely related because they both stem from the same major world factor—from the great commodity boom and inflation which has been going on in recent months.
Early in his speech, my right hon. Friend said that the Economic Survey estimated that we would have to pay £700 million more for our imports during this year, and he put up that estimate by £100 million in the course of his speech. I was not quite sure how that tied up with a statement made by the First Lord of the Admiralty when moving the Finance Bill in another place a week or so ago, when he gave a rather larger estimate and said it would be £950 million.
I am not sure whether the discrepancy is to be explained by the fact that the First Lord was assuming that the present extremely unfavourable terms of trade would continue at least throughout the whole of this year, whereas my right hon. Friend was making a rather more favourable estimate and was suggesting that they might begin to improve slightly.
But, even if we take his smaller estimate of £100 million, that, of course, goes quite a long way—at least half way—in accounting for the discrepancy between the bare balance which the Economic Survey hoped for and the estimate of a deficit of £260 million which the "Economist," in an article this week, said we might expect if the figures for the first six months of this year were projected over the whole year.
Of course, if we add in the stockpiling figure of £150 million, that really makes up the full difference, and that, even in the Economic Survey, was recognised to be a factor which would throw us out of balance. Therefore, I think it is true to say that this unexpected further increase in the prices of our imports accounts almost wholly for the difficulty we are facing at the present time.

I think that just as it is this sharp deterioration in the terms of trade which has brought us face to face with this difficulty today, so we are bound to look to some extent—and I think it is not at all an unreasonable hope in present circumstances—for a slight change in that trend and for something of an improvement in the terms of trade in the coming months to help us get out of this difficulty.
If, on the other hand, we were to assume that import and export prices will maintain exactly the same relationship as that which obtained, say, in June, and that that level of imports will also continue at the rate at which it was running in that month, then, of course, the task in terms of an increase in the volume of our exports would be an absolutely enormous, and, indeed, a frightening, task.
I think that in those circumstances it would need about a quarter more to get us back into a state of balance. Nevertheless, I do not think we should depend too much on an improvement in the terms of trade, even though I hope that something in this direction is a reasonable expectation.
In the first place, I do not think we should do that because, obviously, it tends to lead to a policy of inactivity. The terms of trade are, to a large extent, outside our control, and, therefore, if we look to them as the main factor it tends to make us sit back. We must look to the volume of our own trade, in particular at the volume of our imports, because they seem to have been rising quite sharply this year. I believe that they were up 9 per cent. in volume for the months January to May, 1950, and, of course, in June, although this may have been a temporary feature, the increase was very much more than 9 per cent.
I am inclined to wonder whether all this increase is really necessary. After all, the stockpiling programme of £150 million should not have made necessary an increase of more than 4 or 5 per cent. in our imports. So far as production is concerned, while we are very glad to know that the figures have been a little better than those put forward at the time of the Budget and of the Economic Survey, the rate of increase is much less than in 1950 when imports did not increase.
Therefore, there would not seem to be a great reason for the quite sharp increase which has been taking place this year in the volume of our imports. I think this ought to be looked at very carefully to see whether, in fact, there are any imports coming in and adding to our balance of payments difficulties which we could do without. On the other side, too, we probably want a larger export effort, particularly in the case of consumer goods, than we have been having in recent months.
I hope my right hon. Friend will do everything he can, as he said he would, to use any control which lies to his hand to enable him to make progress in this direction. I do not think anybody in the House would want to under-estimate the seriousness of this balance of payments position in which we again find ourselves. On the other hand, I think in many respects it is a position very different from that of either 1947 or 1949.
Our reserves are much bigger and I do not think it is a problem which is going to lead to a crisis this summer in the sense that we had a crisis in 1947 or 1949, because it is not, of course, primarily a dollar crisis which we are facing at the moment. Of course, there is a dollar problem there—as, in a sense, there has always been since the war—but it is not at the moment primarily a dollar problem. It is the overall problem which is to the fore and the dollar problem which is in the background.
So far as these balance of payment difficulties are concerned, a crisis can only be a dollar crisis. It can arise from other causes, but it can only become a crisis when it becomes a matter of a shortage of dollars. But, of course, even if we keep the dollar problem out of the front door it could come in at the back door if we got into the state where our sterling liabilities were built up to such a level and the sterling claims of other countries in the Commonwealth were also built up to such a level that they were not willing to accept the dollar disciplines which we have had to have in recent years.
We should all face the difficulties of our present situation and be prepared to support whatever measures are necessary to try and get this balance of payments situation back under control before there is any danger of getting into a position

in which we should have this becoming a dollar crisis, not by the front door but by the back door, through other countries in the sterling area demanding that they should have more dollars and refusing to have us act as their bankers as we have done in the past. If that were to happen it would be more serious than the 1947 or 1949 crises, but I think we can certainly prevent its happening.
I want to turn from the balance of payments and foreign difficulties to the rise in prices which has been taking place on the home front. Here, I must come back to the matter which was a subject of dispute earlier on between my right hon. Friend the Chancellor of the Exchequer and the right hon. Gentleman the Member for Ormskirk (Sir A. Salter) and, later, the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton). That is the question—and this, of course, also affects the balance of payments—of the extent to which this deterioration in the terms of trade, which is the salient figure in our economic position, is the fault of His Majesty's Government because it stems from deflation.
The right hon. Gentleman the Member for Aldershot, at the beginning of his speech, produced—taking up a point which the right hon. Gentleman the Member for Ormskirk had made previously—a modified version of the week-end speech by the right hon. Gentleman the Leader of the Opposition. He said all the Opposition intended to indicate was that deflation had put our import prices at a very high level and, therefore, any further increase which took place above that level was that much worse. I think we ought to be clear what the right hon. Gentleman the Member for Woodford (Mr. Churchill) did say, because he said something very different and much stronger. He said:
' Oh!' they say"—
That is, the Labour Party—
'All this is due to Korea.' This is an utter untruth. The main reason is not Korea, but devaluation.
We know, of course, that the right hon. Gentleman the Member for Woodford in these financial and economic matters paints with a rather broader brush than do some of his hon. and right hon. Friends on the benches opposite, but that was a very clear statement. In a speech I made a few months ago I said to the


House that it seemed to me that one of the most irrefutable arguments against this point of view was the fact that even in the year following devaluation—I am not talking now of the last six months—the terms of trade turned against the United States of America as well as against this country. After all, it was the United States of America we devalued against.
If what happened was that we took on a burden to give the United States of America something and our prices went up because the position of the United States improved, then, obviously, this would have shown itself in an improvement in the terms of trade of the United States. But it did not happen. Their terms of trade deteriorated—a clear indication, I should have thought, that these world price movements we have been having in the last years or so were due far more to Korea, stockpiling, Western re-armament generally and other factors than to devaluation.
There is another point to which the Chancellor also referred this afternoon. There were recently published figures for a number of countries all over the world showing how their cost of living has moved compared with ours during the last year or so. It is really very striking the way in which the United Kingdom comes out in those lists. What we have been facing in the last few months is an inflation of import costs.
One would have thought that if there was one country in the world which was really going to suffer heavily from an import cost inflation it was the United Kingdom. One would have expected in these circumstances, other things being equal and the policies of the Governments being taken as the same, that our increase in the cost of living would have been greater than in any other country in Western Europe, America and most of the Dominions.
Exactly the reverse has been true and we stand very well indeed in the list. What is even more remarkable, we stand better in the list than what are thought of as the three deflationary countries in Europe—Italy, Belgium and Western Germany. To some extent hon. and right hon. Members opposite have put it to us as a choice. They have said, "It may be that you have a little more unemployment in those countries, but look at

how they preserve the value of money." But if one has the position where one has unemployment and the cost of living going up more quickly as well, it does not look like a confirmation of the sort of argument the hon. Member for Chippenham (Mr. Eccles) is putting before us all the time.
When we are dealing with the very vague propositions which the right hon. Gentleman the Member for Aldershot was putting before us towards the end of his speech and saying, "If we have a change of Government then, after a lapse of three years, you would see an enormous improvement in these things," it is a very big flaw in that argument if one looks at the whole range of countries—many of them with Governments like the Government the Front Bench opposite would bring in, and pursuing the sort of credit policies the right hon. Gentleman hinted at in those rather vague sentences at the end of his speech—and discovers that their cost of living is going up more quickly than ours. That is not a very good piece of evidence to support the point of view he has put forward.
Therefore, relatively—and I stress "relatively"—it seems to me that on the cost of living issue we have done extremely well in the last year. All the statistics which are available support the point of view often put forward from this side of the House, that in a state of full employment planning Governments which believe in control are more successful in preserving the value of money than are free enterprise Governments. That, of course, is a purely relative statement and nobody is going to deny, at the same time, that we have had steep increases in the cost of living and that it might be very serious if they continued.
It would be very serious, because there is real danger of faith in the future of money being undermined and because of the great hardship which changes in the value of money almost inevitably inflict on all sorts of people in the community, many of whom can least afford to bear hardship of that sort.
We should, therefore, consider very carefully the proposals my right hon. Friend the Chancellor put forward this afternoon, the suggestions he made that the price increases might be less rapid in the coming months than they have


been, and the measures he put forward for helping on this policy of relative stabilisation. I am very glad he chose this moment to try to make a new departure so far as price policy at home is concerned, because I think this present time is a time when it is necessary and possible to make a new departure.
The break in world commodity markets, which had got as far as showing itself in a flattening of our index of import prices by June, offers the prospect of our being able to regain control of the whole price situation in a way one could not have hoped to do in the months which have gone past. But, also, just as it makes it possible to do this, it makes it more necessary to do it. My right hon. Friend referred to the fact that we were now possibly moving into a situation in which the effect of costs at home upon our exports might be more serious than it had been in the past year or so and might be something more like the position which prevailed during 1949.
I do not think that has arisen yet, but clearly, with the end of the world inflation, there is a danger that, particularly so far as consumer good exports are concerned—and we must look to them more than to investment goods exports to get us back to balance—there is a danger that we might get into a position where a cost inflation at home might have a very serious effect upon our ability to export.

Mr. Nabarro: Surely it has done already. Surely the very wide gap in our overseas balance of payments is a direct result of the very causes to which the hon. Member has referred.

Mr. Jenkins: I should not have thought for a moment that it was. If the hon. Member had been here at the beginning of my speech, or if he had listened to the speech of the Chancellor, or had studied the figures which have been published, he would have realised that the gap was almost the direct result of the inflated prices of our imports.
In any case, I should not have thought that it was the general experience during the last six months that there was any difficulty in selling exports by and large. I was arguing that with the end of world inflation—it may be only temporary—

one was moving into a situation in which that difficulty might arise again.

Mr. Osborne: May I ask the hon. Gentleman a question? He need not scowl like that. I want to ask him a practical question. What evidence has he that it has not been difficult to sell exports abroad during the last three or six months? Does he know anything about it?

Mr. Jenkins: I only scowled because I knew the sort of question I should get from the hon. Gentleman. I have no personal experience, but I should have thought it was obvious, if one looked at the prices of British exports and compared them over the broad field with the prices of exports of other countries in recent months, that British exports were, on the whole, cheaper.

Mr. Osborne: Instead of talking so cleverly about something which he admits he knows nothing about, would the hon. Member talk to men who have spent their lives in the export trade and ask them what the facts are? I can give the hon. Member some practical proof of my contention.

Mr. Jenkins: The hon. Member is a typical example of someone who knows one tree so well that he can never even get a glimpse of the wood. Apart from anything else that I have said, I should have thought that if one looked at the way that the volume of our exports has been going up during the last year or so it would make absolute nonsense of the proposition which the hon. Gentleman was putting forward.
I was about to say something which I think would command the support of the hon. Gentleman. I think that the present moment offers both a new opportunity and a new danger so far as this question of prices on the home front is concerned. I therefore think it more than ever important that we should try to seize this opportunity and try to produce a period of stabilisation which may now be possible in a way that it has not been possible in recent months.
My right hon. Friend the Chancellor of the Exchequer was right in starting with prices and profits rather than with wages. Wages will have to come into any question of stabilisation, but I think it is inevitable after the relative gain—


slight perhaps, but none the less distinct—which dividends have made in the last few months, that before there can be any question of wage stabilisation there will have to be a lot done about prices and dividends. I very much welcome in this direction the proposal for dividend limitations which has been put forward. I welcome, too, the proposals for price control in various ways. I wish my right hon. Friend had felt able to go a little further in this question of prices at the present time. He said there were some increases which would be bound to come along in the next few weeks. Let us get those out of the way as quickly as possible, and then I think it might be possible to try a period of complete price stabilisation for a number of months so far as rationed and other basic goods are concerned.
I think that might be possible. I think it might be worthwhile—I do not think my right hon. Friend excluded this from his mind—using an extension of subsidies in order to achieve this. I am not as fond of subsidies as some of my hon. Friends are on this side of the Committee. From the point of view of redistributing wealth, I think subsidies are rather clumsy. One can often achieve the objective better by a number of other methods. The case for subsidies is essentially a case for using them as a stabiliser, and it really becomes a strong case when, at a psychological moment, a real effort at stabilisation might hope to achieve success.
I think that we have now reached that position and that it is worth trying to have a guaranteed period of price moratorium for two or three months. It could not go on after that if wages went up very fast indeed in that period. What would happen would be bound to depend upon wages. No Chancellor could pour out subsidies indefinitely to neutralise the effect of a mounting cost inflation which showed no sign of slackening. But this would be a risk well worth taking. It offers the first real chance we have had for many months of getting some stabilisation back into home prices.
If that could be done it would do a great deal to strengthen our economy, to remove the worries of a lot of people and to make possible that full effort from everybody about which the right hon. Member for Aldershot talked so much but towards which he did not contribute any concrete suggestion.

6.26 p.m.

Mr. Nigel Birch: My right hon. Friend the Member for Aldershot (Mr. Lyttelton), said that the hon. Member for Stechford (Mr. Jenkins), has the impetuosity of youth, but he also benefits from having the gestures of the elder statesmen. The hon. Member has treated us to a useful lecture on which I shall have something to say later, but there is one minor point that I wanted to raise with him now. He said it was wrong that we should be importing so much more by volume than we were last year. But surely the reason for that is that last year we were destocking and that this year we have been forced to re-stock at the top of the market. If our industry is to carry on at all our imports must increase.

Mr. Jenkins: I think I specifically allowed for that. I mentioned a figure of 4 per cent, or 5 per cent. which seemed to me to represent the increase for which the stocking-up programme would call, but the increase in the volume of our imports has been substantially above that.

Mr. Birch: It is inevitable, and I should be surprised if people were over-importing at the moment. It is necessary when one's stocks have run down to replace them before resuming efficient production.
The hon. Gentleman said that the Chancellor made a new departure. I am bound to say that I was very startled by that statement, because those of us who have been here some time—and the hon. Member for Stetchford has; he was talking about the crises of 1947 and 1949—must surely agree that there is nothing less like a new departure being made today. One has the feeling, "This is where I came in."
We always get the same process every other year. We say that things are not going very well and hon. Members opposite say, "You are crying wolf." Then we have complacent speeches from the other side; the right hon. Member for Bishop Auckland (Mr. Dalton) says it is a proud day for patriots, and the hon. Member for Stechford makes complacent speeches on the Budget. Then, sure enough, at the end of July a crisis blows up and we have a crisis debate.
The Government always do exactly the same thing. They say, "We want a few


more controls," always knowing quite well that this makes hardly any difference at all. They always say that we should do something about fish in the autumn. Then they say that some dollar imports will be cut, which brings on a crisis in the following year. Then they say, "We cannot do anything about expenditure." Then there is an appeal for wage restraint, and there is always a more or less meaningless anti-Capitalist gesture at the end of it.
This time it is, of course dividend restriction. It is interesting that that was the very first thing which that distinguished National Socialist, Hitler, did when he came into power—exactly the same thing. The hon. Member for Orkney and Shetland (Mr. Grimond) made a few remarks about it which I thought were quite astute, and the only remark I want to make, to emphasise what he said, is that the whole basis of the Government's policy is always to favour improvidence.
Anybody who has distributed a lot in the past is allowed to do it in the future, in just the same way as it worked over nationalisation; anybody who had over-distributed did better than those who had not over-distributed. The lesson from the Government is this: never do right, for if you do wrong you may get away with it and you will certainly be favoured. Every single thing the Government can do to discourage prudence, and to punish those who are prudent, is done.
Hon. Members are very annoyed that anyone owning ordinary shares should be able in any way to shield himself from the damage caused by rising prices. Anyone who holds Government securities is having his money steadily reduced in value, and there has been a magnificent fraud on the shareholder in the nationalised industries, because instead of having real assets he has been fobbed off with gilt-edged securities, and gilt-edged securities are going down in terms of pounds and in terms of real values. It seems a pity, I think, to many hon. Members opposite that as so successful a fraud has been done on the nationalised shareholders it could not be done on all shareholders.
I do not want to go into figures, as my right hon. Friend did. The practical

effect of the Government's decisions, of course, is negligible and what we have is exactly the same as we had in 1947 and 1949—a decision to postpone the crisis until the autumn. The sequence is always the same: postpone the crisis until the autumn; in the autumn things get a good deal worse—although we are always told that they will not—and the Government have a sort of drunkard's repentance. They wake up, as so many drunkards do, and see angels round their beds.
Suddenly many things which were absolutely impossible become quite possible, like cuts in capital expenditure and cuts in administrative expenditure, and it is always remarkable to see that things which previously it was sacrilege to mention are now done. Then things get a little better, the cycle starts again and a year afterwards the same thing happens all over again.
What I want to draw to the attention of the House is this: that the victim is always the value of the £. In 1947 and in 1949—and this time—ultimately the stability and value of our currency "goes west." That brings me to the question of devaluation. My right hon. Friend the Member for Aldershot (Mr. Lyttelton) very rightly castigated the Chancellor for what he said. Let us think about this. We know that the prices of world commodities are determined by American dollar prices. Supposing dollar prices had never moved at all. Today, we should have to pay £143 18s. for what cost £100 before. That is the effect of devaluation.
Why did Sir Stafford Cripps so bitterly oppose devaluation? He opposed it because he knew it would turn the terms of trade against us and in the end he did not do it as an act of policy but because he was forced into doing it. Why is it that E.C.E., Mr. Roy Harrod and other people are recommending a 'revaluation? I am not supporting that, but they are recommending it because they believe it would turn the terms of trade in our favour, as, of course, it would.
To say devaluation is making no difference is plainly wrong and plainly dishonest—just as dishonest as was the devaluation broadcast, and I believe that the dishonesty of that broadcast is one of the reasons why we got into such a mess last year, because in it we were told


that as a result of devaluation prices would not go up—[HON. MEMBERS: "No."]— yes, indeed; it was said that bread would go up a very little but that nothing else would, or should, go up.

The Financial Secretary to the Treasury (Mr. Douglas Jay): The hon. Gentleman is carrying his misrepresentations ridiculously far. All the broadcast said was that the rise would be limited during a limited period, to the end of 1949. That was all that was mentioned.

Hon. Members: Withdraw.

Mr. Birch: I certainly shall not withdraw. I listened to the broadcast with great care and I thought it was the most dishonest I had ever heard. It certainly did not give in any way the impression which the Financial Secretary has endeavoured to give.
The whole of Government propaganda was that devaluation would make a negligible difference. The effect of that was that the Government tried to make it true, and that was why we refused to buy commodities when prices were rising and why we were caught out last year. I am quite certain that that is the reason.

The Economic Secretary to the Treasury (Mr. John Edwards): That is a monstrous statement to make, especially in present circumstances. I ask the hon. Gentleman specifically: did Sir Stafford Cripps, in that broadcast, not limit what he was saying to the year in question? Why does the hon. Gentleman suggest that there was no limitation whatever?

Mr. Birch: The whole point was this—that the impression which Sir Stafford Cripps gave was that nothing was going to happen.

Mr. Jenkins: Answer the question or withdraw.

Mr. Birch: If Sir Stafford Cripps thought something was going to happen afterwards he might have mentioned it, but he did not. I said this to his face. I am sorry that he is not here, but I said it to his face in the House on a previous occasion. I think it was a very dishonest broadcast.
I want to turn now to the foreign exchange position. My right hon. Friend spoke of the effect which our policy is having upon the rest of the sterling area and of the very high balances. I think

they were £2,734 million on 30th December last—that is the figure reached by the rest of the sterling area. My right hon. Friend instanced the very high level of the Australian balance. But, of course, it is worth remembering that a lot of the increase in the balances also comes from dependent territories whose policy we control. In honour and justice we ought to be extremely careful about how far we keep their money blocked here.
The policy of hon. Members opposite, and particularly the "One Way Only" policy, includes helping backward areas. In "One Way Only" there is a great deal about helping backward areas. It says we could stop rearmament and could give one-sixth of the loot away as conscience money to the backward areas. But there is no worse way of treating the backward areas or exploiting them than retaining a very large balance here which we control and which they are not allowed to spend. That is happening to a certain extent in Nigeria and other places. It is something about which we have to be careful.
As my right hon. Friend said, it would be a prime disaster for this country if the structure of the sterling area broke up, and it was envisaged in the economic White Paper, paragraph 93, that there was a danger. These are the words:
… a substantial deficit would raise the serious risk of an accumulation of sterling at a rate faster than overseas holders might be prepared to tolerate.
That is one of our great dangers today. The hon. Member for Stechford said we could not get into a real crisis because it was not a dollar crisis, but a really bad strain on the sterling area would, I believe, ultimately be just as bad.

Mr. Jenkins: I think I had better clear that up. I certainly did not say that the difficulty could not lead to a real crisis. In fact, I went to some lengths to explain that it might. I merely said that I did not think it would lead to an immediate crisis this summer, such as we had in 1947 and 1949, because, in the first instance, it was not a dollar difficulty, although it could become a dollar difficulty through the back door.

Mr. Birch: I accept that. I want to turn to why the mess is so much worse than was anticipated. I cannot myself understand why it is that our imports


seem to be costing so much more than was anticipated in the Economic Survey.
After all, prices have fallen quite appreciably since the publication of the Economic White Paper, and the Chancellor, when he was making his calculations today, seemed to me fairly optimistic about the future of prices. The hon. Gentleman the Member for Stechford said it was very unexpected that we had to pay so much for our imports. Can that really be unexpected when prices are now lower than when the White Paper was issued? It seems to me very strange.
Obviously, the Chancellor has been optimistic—unjustifiably optimistic—about the course of prices; but I think myself that the real thing that has gone wrong is—and this is something that the right hon. Gentleman was not altogether frank about today—that prices have not gone up so much faster than incomes as he calculated they would. That is what he was relying on.
I think we can see that when we look at the figures. Last year there was an overall surplus—I think I am right in saying—of £247 million; this year there is going to be an overall deficit of something like £457 million. That is what we budgeted for. There is an enormous gap between the amount of our expenditure covered by taxation in the two years. Part of that was to be covered by running down our foreign balance; a large part of the rest of it was really going to be covered by a rise in prices cutting into real consumption. That was the real conclusion.
The right hon. Gentleman was perfectly right when he said that he was not planning to put up prices. But he knew prices would go up, and that there would be that effect. That is where, I think, he has gone wrong. I think the gap is a great deal bigger—the inflationary gap—than he calculated at the time of the Budget and, therefore, that he has got incomes chasing prices much more rapidly than he thought would be the case.
That is the conclusion of the E.C.E. Report, to which some hon. Members opposite pay some attention, and of the "Economist," which we always quote on this side of the House. His calculations were based upon optimistic assumptions. Some of them are wrong, and they have not come off, and that has landed us into the usual mess.
I believe, as I said, that the remedies proposed by the Government are just the same as the ones they have always proposed on these occasions: that is to say, they are negligible; they offer no new departure; they offer no solution whatever to the country; and I think that they are supported by arguments which are disingenuous. I think the situation will get worse, and I suspect that we shall be coming back in the autumn to have the Government make another death bed repentance, and doing the things that they have said they never could or would do.

6.43 p.m.

Mr. Ellis Smith: We have today listened to a very able examination by the Chancellor of our present economic situation. In my view, it was a close analysis worthy of careful study by the people throughout the country. My right hon. Friend's proposals were a further instalment of the real Labour policy, and I am hoping that they will find expression in the policies being pursued by other Ministers and by other Ministries.
My right hon. Friend emphasised the importance of increasing the output of coal and of increasing its export. With that desire all students of industrial and economic affairs are bound to agree. Where we begin to differ is in considering how we are going to bring that about. We have been putting forward to the Ministries, in documents now on the files in those Ministries, and in conference speeches, and in other ways, proposals for dealing with this problem. They have not yet found expression in national policy, but, as sure as I am standing here, if this country is to save itself those policies we have outlined will have to be adopted.
It is only approximately three months ago since the Budget was introduced, and here we have today further proposals which, really, should have been contained in the Budget. I hope no one thinks I am speaking critically in regard to this, or striking a critical note. It is so easy to do that. What I am appealing for is that we should profit by our experience in the past three months and apply the lessons as soon as possible.
World events are moving at a quicker rate than ever they have moved in the history of mankind, and it behoves us to see, as individuals, as people working in industries, and as a nation, that we move


in accordance with world events; and therefore, if it is right to re-examine on a big scale, as the Chancellor has done today, our economic position, then I also would appeal to the Economic Secretary, in particular seriously to consider the amount of investment in a number of our key and basic industries.
I am convinced that we want a greater dynamic, a greater tempo, and a greater sense of urgency in a number of our basic and key industries. I refer in particular to coal and to power. In regard to the men engaged in the industry, no one can point a finger at them. In regard to the men engaged in productive industry, no one can point a finger at them, because they are responding in a way they have never responded in the past in any other part of the world.

Mr. Osborne: Is the hon. Gentleman not aware that quite recently at a trade union annual meeting one of the national leaders said that the response of the workers in nationalised industries had been very disappointing, and that they had not lived up to their responsibilities?

Mr. Ellis Smith: That may be an individual opinion, but it is not my opinion, and it is not the opinion of those responsible for running industry. I am not speaking about little industries where they make marbles. I am speaking about industries in which men have got to be efficient and have a great background of theory to enable them to manufacture. Nine out of 10 of them will complain about this, that and the other, but when one gets them to talk seriously they stand in admiration of those who are serving with them.
I was saying that if we are to get the coal output which we all desire, it is necessary to concentrate all our resources where we are going to get the best and most immediate returns. To a certain extent, this policy is being applied, but it is not being applied quickly enough having regard to the economic situation in which we are.
For a moment or two let us consider the position of power. It is surprising how few realise the serious economic con sequences of the power cuts which are constantly taking place. I am not speaking too critically on this, because I know how easy it is to talk. It is when one goes to translate talk into realities

that one is put to the test. I am, however, convinced of this, that if an appeal were made to industry, and if the big industrialists were got round a conference table, and if the people responsible for determining the amount of investment in the power industry could be got to the conference table, great steps could be taken to increase production and also to quicken the delivery dates of the apparatus that power plants urgently require.
I have had the privilege of meeting during the past week or two some of the most able electrical engineers in this country. Reading their publications and documents, I have satisfied myself of this: I am convinced that we could also, by harnessing new ideas, increase the output of power in this country. In several parts of the world the wind is already harnessed. In our younger days many of us thought that was out of date, but with the introduction of new methods, coal and other motive power is saved by harnessing the wind. The same applies to hydro-electrification. Here I am bound to admit that we should not be able to get immediate results.
We must be concerned, not only with immediate results but with our children's future. We are in our present position because our forefathers acted with courage and built the country up in the way they did, and what we must ask ourselves is: Are we in our time playing our part, in this new situation, so that in the future the country will he so equipped as to be able to hold its own in the world, as it has done in our time?
I cannot understand why we have not made progress, with report after report on the shelves of the Library, which have been prepared by some of the finest hydro-electric engineers in the world. Metro-Vickers, British Thomson-Houston, and a number of others, have manufactured hydro-electrification plant all over the world, but not for our own country. It is admitted that at the Severn Barrage this is one of the best propositions in the world. If anyone doubts this, they need only go to the Library and get out report after report in which they will find the evidence to support what I am putting forward.
The plea I make is that, in my view, the dynamic which has found expression today because of the present serious


situation needs to find expression in the Ministry of Fuel and Power. We have the National Coal Board, which is doing a great job, to the credit of all concerned. Mining engineers throughout the country, and the miners themselves, are exerting all possible energy, but I am convinced that the same tempo and the same dynamic does not exist in the Ministry of Fuel and Power, and the time has come when someone on this side of the House should say so in order to stimulate what we all desire to see in that Ministry.
I now come to the question of consumer goods. The Chancellor said that the consumption of consumer goods must be reduced and exports must be increased. I feel sorry for the people of our country. Most of them, the people to whom we belong, with whom we live, and amongst whom we were born, realise that, although we must be prepared to face up to our economic situation and suggest ways of overcoming the problems, the situation would have been far worse had we had a Conservative Government during the past few years. We know that from bitter experience.
The Chancellor says that consumption must be reduced and exports must be increased, and I appeal to him to consider the need of introducing some means of achieving a fair distribution of the consumer goods available, because we have not got it at present. For children's clothes, boots and shoes, and furniture, it is essential to introduce some system if those engaged in industry are to be expected to give of their best, as they have done in the past few years; they must have a square deal with regard to the consumer goods available.
Let me give but one example. In the City of Stoke-on-Trent they produce the finest pottery manufactured in any part of the world. They are doing a good job for our export trade. What happens? We all make mistakes; slips are made here and there, and the result is that there are a fair number of export rejects. Where do these export rejects go? These export rejects, beautiful pottery with which only the expert can detect anything wrong, go into Kensington, Regent Street and Bournemouth, while the people of Stoke-on-Trent, Manchester, Liverpool and Glasgow where the work is done never see any of it. That is only

one illustration. If our people are to be expected to give of their best we need to adapt our policy to meet their needs.
The Chancellor also referred to the need and importance of increasing the output and export of textiles. Today, in answer to a Question, the President of the Board of Trade said that we were going to rely on the pottery industry to increase its output and exports. This adds emphasis to something I want to say later. My right hon. Friend also said that we need to increase our dollar exports, and that we shall call together Commonwealth representatives in order to deal with a number of problems which he mentioned.
I said earlier, in an interruption, that if hon. Members would read the annual reports of the Trades Union Congress they would know the trade union policy towards the problems with which we are faced today. Anyone who knows anything about industry knows that one of the greatest menaces to our standards before the war was the serious Japanese competition based upon terrible working conditions and very low wages. At the Trades Union Congress, speaker after speaker said that he had proposals to make for dealing with this problem, and I have here extracts from the annual report of the Trades Union Congress of 1950, at which representatives of the hosiery trade union, and other trade unions, put forward proposals and, representing their fellow trade unionists, pointed out the seriousness of the situation.
I will content myself with quoting one or two extracts from the speeches of two of the most respected trade unionists in Lancashire, who are always relied upon to represent their fellows wherever they may be. I refer to Mr. Ernest Thornton and Mr. Lewis Wright. Mr. Wright, speaking at the last Trades Union Congress, said:
Lancashire is seriously worried about the re-emergence of Japanese competition based upon low labour standards. We feel that if the present policy in Japan is pursued much longer, within two or three years we shall again be faced with pre-war conditions in the principal towns of Lancashire.
Yesterday many hon. Members said that the trade unions in Japan should do this, that and the other, but Mr. Wright, as a result of the visit of a deputation from Lancashire, points out that, whilst


he is far from being against America in any way—and he stresses that—there is evidence, which can be produced if necessary, that the Americans in Japan are preventing the Japanese workers from organising and from improving their conditions and wages. Therefore, no wonder uneasiness expresses itself in this House, because the real voices of the trade union movement of this country express themselves in the annual conference of the Trades Union Congress.
What I want to do today is to support the policy which has been put forward by my right hon. Friend and, at the same time, to say that it is no use pursuing a policy internally at home of this character unless it is also going to find expression in our international and foreign policy. In the area which I represent, we find more foreign competition than in any other part of the country. In that area, as the result of trade union work and the sacrificing of our people, we have built up relatively decent standards, and the country is looking to our area to increase its exports and to increase its volume of production.
It is doing all that, and we call upon the Government to see that some international arrangement is made, and, if we can do it internally, to prevent firms taking advantage of one another and prevent municipalities from taking advantage of one another, by introducing the fair wages clause and fair conditions. If we can do that, then I say that the same thing should be done internationally, in order that there may be fair competition, and that we should not be subject to the unfair competition which we had before the war and which was driving the world to economic suicide.

7.2 p.m.

Lieut.-Commander Baldock: It is a frequently repeated cliché that our economy has suffered from attempting to do too much too quickly, and that it would have been better to put first things first. I think that is also true of our economic policy. As my right hon. Friend the Member for Aldershot (Mr. Lyttelton) has said, the proposals made by the Chancellor of the Exchequer this afternoon have simply been the mixture as before, although this time the mixture seems to contain a little out of every bottle on the shelf. Would it not have been better to concentrate

on one or two of the more important ingredients; the more vital elements of policy that really matter, rather than to spread it over this enormous number of different components?
I should like to suggest four courses which I feel to be of vital importance, and which, I believe, if carried through with full vigour would have a profound and comparatively quick result upon the whole economic position of this country. The first, which has already been mentioned by the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), and by several other speakers, including the Chancellor of the Exchequer, is the question of raising more coal. I say the "raising" of more coal because the continuance of open-cast workings should be deplored on every possible occasion as inefficient and wasteful.
Whatever the hon. Member may have said, the main problem of getting more coal is how to provide more labour and manpower in the pits. The Government are already making efforts to recruit Italian labour to help out in that direction. Why cannot that policy be pursued more vigorously and quickly? Surely in that way, with comparatively little effort, tremendous results could be obtained very rapidly. The manpower is available, and it is only a matter of training it and getting it over here; it is willing to come and willing to work.
If the argument is that there may be resistance from the National Union of Mineworkers, surely that is an indication of the total failure of the Government's policy to run our economy by exhortation; because, goodness knows, the miners have not lacked exhortation. There is a regular procession of Cabinet Ministers, right up to the Prime Minister, to the North and Midlands every week-end to tell the miners how important are their efforts; and if they have not yet appreciated the position, that looks as if some alteration to Government by exhortation must be tried. Is it not time for really resolute Government action in this direction where an equal return can be made?
The second suggestion I should like to make is one that has been given frequently before, because none of these suggestions are new or can be new, and that is to couple higher wages, profits and dividends with greater production. It has constantly


been repeated that higher incomes, whether from dividends, wages or salaries, are only justified by higher production. What is being done about that?
The new policy is that dividends are to be controlled by statute, and wages are to be checked only by exhortation. Surely what we all want to see is that there should be no limits to either dividends or wages, provided that their increase is really proportional to the increase in output. Can some formula not be worked out by which something of that kind can be achieved, so that there is no suppression of either dividends or wages, provided they can be justified by increased output? Everyone pays lip-service to this, but is it not time that action was taken to achieve it.
The third point which I wish to make is that there should be a reduction of direct taxation, which is really only a corollary to my second point. If to get greater output we need to offer greater incentive, then surely not only the matter of having more money to pay out in the pay packets but also the question of the proportion of that money paid out which the wage-earner can retain for himself has to be considered. Surely the answer in this direction must be first to try to reduce the whole rate and burden of taxation by economies and more efficient administration. Cannot we go further than that And say as a greater measure and as a more immediate measure that the emphasis of taxation should move more towards the indirect and, therefore, away from the direct, because there is a tremendous amount to be said for that?
There are many advantages. The ordinary wage earner, if he has the opportunity of earning higher wages, and if direct taxation is not so soon felt as his wages increase and as he makes more on overtime and on piece work, handles far more of his money himself. If the emphasis is moved further towards indirect taxation he has far more control and far more freedom in his financial arrangements. He has some choice.
The wage earner can choose how the larger quantity of money which comes into his hands and which he is allowed to retain will be spent. He can choose whether he spends it on cigarettes, entertainment, betting or a television set, thereby contributing a considerable amount of money to the Exchequer, or

he can decide that he would like to save, or invest in in a house, in which case he would be paying comparatively little taxation. It seems to me that would be a far better emphasis towards an increase in incentive to people in industry and agriculture to increase their production.
My last point is in the field of agricultural output. Here again is an opportunity for seeing that exports and imports balance. Here is something which can be produced to a very large extent in this country from indigenous resources. The targets which were set by the Minister of Agriculture in 1947 have nearly been achieved. They were not, in my submission, nearly high enough. Already the impetus towards any further increase in agricultural production is dwindling, and will, I submit, rapidly disappear unless some action is taken. A number of things have occurred which have acted against the continued expansion of agricultural production.
I believe that removal of the subsidy on fertilisers was a great mistake. It is essential, if we are to build up and stockpile fertility in the land, which is as important from the defence point of view as from the economic point of view, to apply the maximum quantity of fertilisers The best way to encourage people to do that is, I think, to help them with a subsidy. If it is said that that cannot be economically justified, I believe that it would be better to skim a certain amount of money off the prices of agricultural products and let the farmers have it back in the form of fertilisers, because that is the best possible way of putting their money back into the land.
The farmer who uses the utmost quantity of fertilisers is the farmer who is making the best possible use of his land, as well as building up its fertility. Already the farmer on the poor land is feeling the pinch, because one farmer in 10, according to a recent survey carried out in the Midlands, is losing money. The one farmer in 10 will probably be unable to lay out much money on fertilisers at the present prices. That being the case, his output will dwindle still further. I believe that was a very unfortunate mistake at this particular time when the world prices of fertilisers are rising.
There is also the need for greater quantities of feedingstuffs, and I do not believe that the utmost efforts are being made in


that direction. The President of the National Farmers Union recently said that in Canada considerable quantities of coarse grains and inferior wheat were available as a result of autumn frosts, and apparently the greatest efforts to obtain them for this country have not been made. There is also the opportunity of obtaining more feedingstuffs from the Continent. Nothing has been done, so far as I know, to see if there could not be greater co-operation with agriculture on the Continent. What approach has been made to the Pleven plan? I think that supplies of sugar beet and coarse grain on the Continent could be obtained if the utmost efforts were maintained.
There is also the question of labour which is draining away from the land. At the present time, that is happening at quite a high rate. Unless every effort is made to improve rural amenities, it will certainly continue to happen, and be aggravated by the call-up of agricultural workers in the autumn. These are all danger spots which the Government should be considering urgently. It was made apparent from the debate on agriculture last week that there is far too much complacency on the part of the Minister with regard to the future of agricultural output.
I ask the Government to give this matter their earnest consideration. The more agricultural output, the more output of coal, the greater opportunity for incentives in industry, and a tendency towards indirect rather than direct taxation would, I believe, produce a change in our economic life very quickly.

7.12 p.m.

Mr. Carmichael: The Chancellor of the Exchequer has given today what might be regarded as a report on the economy of the country some three months after his Budget speech. As has already been stated, this is not a common practice. I assume the Chancellor made this announcement because of certain financial changes that he is going to make. I also assume that he made the pronouncement because of uneasiness in the world economy. I think we can regard this debate as an addition to the debate we had on Monday.
Our Government at the moment, if I see it aright, regards our re-armament programme as No. 1 priority. In order

to strengthen our re-armament programme we have to make an effort to stabilise our economy. In view of that, we have today been arguing about the balance of payments. In other words, we are somewhat disturbed at the serious increase in our imports and the decline in our exports, and the problem facing us is how best to balance out trade and stabilise our internal economy.
This is a very serious debate on the economy of the country, and in a debate of this kind we have to try to apply our political remedies. I cannot see a common agreement in this House on the political solutions we should adopt for our economic problems. For my part, I want to say at the outset that, although I believe that from 1945 onwards the Government made a great contribution not only to the stability of our own economy but also to a steadying of the world economy, there has been a tendency unfortunately in recent times not to apply the vigorous economic policy which we applied in the beginning, but rather to slip back into orthodox economic methods.
Different views are held in the House about the nationalised industries. It has often been argued that nationalisation has been a failure and should not be extended. I regret to say that I read in the Press that a very prominent trade unionist was arguing that we need not undertake any further nationalisation. I believe that would be a disaster. I am not going to argue at the moment that nationalisation has had all the successes I should like nationalisation to have, but I am satisfied it is quite impossible to try to plan the social life of the people outwith the planning of our economy.

Mr. Nabarro: Will the hon. Member give the name of the trade unionist to whom he is referring?

Mr. Carmichael: I was referring to the secretary of the Transport and General Workers Union, Mr. Arthur Deakin.

Mr. Nabarro: The hon. Member will probably recall that Mr. Arthur Deakin did not advocate that nationalisation should stop. What he said was that, purely as an expedient, if the Labour Party engaged in any more schemes of nationalisation or proposed them at the next General Election, they would receive the biggest whacking of their lives.

Mr. Carmichael: If I read that aright. surely I am correct in stating Mr. Arthur Deakin told the Labour Party to stop further nationalisation, whatever be the explanation for it.

Mr. Nabarro: Purely as an expedient.

Mr. Carmichael: That was what Mr. Deakin said, but I want to argue the opposite. I do so, first of all, by recalling to hon. Members on this side of the House that it was because we built our movement on the principle of nationalisation and socialisation that we gained the reins of government.
Surely we are not going to admit that the national ownership of the essentials of life has been a failure. The only failure I find is in the form of the administration. I have often argued it was very wrong to have a special board for electricity and a special board for gas. I believe there ought to be an integration of those essential power instruments. I cannot see any justification for nationalisation if we supplant one board for another board. The only sound justification for nationalisation is the saving in many directions as a result of integrating the systems.
I want to see greater support for the idea of nationalisation. What is the fear I have at the moment? We have difficulty in getting raw materials from abroad. They are essential to the speeding up of our re-armament programme and to developing our export trade. Can the Chancellor give us any indication how these priorities will be exercised? Can we take it that the steel will be going almost entirely to re-armament? If so, that must injure the basic industries associated with the export trade. If we are to make the attempt in three years to gear up industry to produce armaments, I cannot see how we can avoid seriously affecting the export trade.
How are the Government attempting to integrate re-armament with the export trade and what is to be the position of the ordinary civil development of the country? There has been no mention of the curtailment that will take place in our ordinary civic life. We have not been told that there will be a serious cut in the building of schools and houses and other things required in this country. Yet on that basis, I cannot see our avoiding serious domestic cuts. I should like to

be told whether the Chancellor is sufficiently confident of our economic stability to carry out re-armament without serious inroads on the domestic needs of the country.
For the last six years, quite apart from the war period, we have been calling on the great mass of the people to restrain themselves. I was sent to this House of Commons for the express purpose of exercising my influence for the improvement of the general conditions of the people whom I represent, and not merely to improve their conditions in getting them regular employment. Obviously regular employment does not go very far if you still have to live in the same drab, unhealthy conditions. I am disturbed at the serious challenge to our economy from re-armament, because I think it must take away from the essential domestic development of the country.
It has been argued that we can get many of these things by increased production and particularly increasing the output of coal. We have been told by the hon. and gallant Member for Harborough (Lieut.-Commander Baldock) that we had better stop these exhortations to the miners at week-end speeches, from the Prime Minister downwards, asking the miners to increase their output. What other method would the hon. and gallant Gentleman adopt to increase the output of coal? It is strange that the more opportunities we have for education the more we wish to escape from these essential industries which we are always calling upon for increased output.
There is a steady decline among the rising generation to go into the mining industry. I question whether there are many hon. Members who would exhort their sons, no matter what their education, to go into the mining industry and to engage in that form of contribution to the national wealth. When we recognise that fact, we are compelled to appreciate the importance of exhortation to the people in the mining industry.

Lieut.-Commander Baldock: I did not say that the miners should not be exhorted. I said that the exhortations had failed if they had not resulted in the increased output that was required.

Mr. Carmichael: Have they failed? Two things connected with mining can be shown in the last five years. One is


that there is a dignity in the mining community never previously possessed by the miners. The other is that we are getting an output we have not had for many years. I have not gone as far as some of my hon. Friends in the mining industry who argue output has never been so high. I say the output per man shift is higher than it has been for many years. That goes without question. What serious improvements are being made in the mechanisation of mining to encourage men to get some of the labour shifted from themselves on to the machines? There is the possibility that because of the drive for exports there will be controls and restrictions, and that many industries like mining will be required to wait before they can have big improvements.
I turn specially to the transport service. It has been argued that there can be no objection to increases in wages and profits if the industries are pouring out the goods. That can be argued in the abstract, but how does it square with railway work? One can assess the wealth which comes from the mining industry, or the steel works, or any of the directly-producing industries but how do we assess the energy and effort put forward by the transport workers? They cannot be measured in precisely the same way.
The transport service is one of the most vital industries, yet today we are losing men from it because they can get better wages in other industries. I have no doubt we shall be told on Tuesday that the railway industry of the country is a complete failure because of the deficit in the returns. I regard railways as an essential part of our national service. We cannot measure it as an independent economic unit, divorced from all the other economic affairs of the country. Therefore, it requires to be regarded as an industry needing some form of subsidising from time to time. I cannot see it being other wise.
The final point I want to put to the Chancellor of the Exchequer concerns raw materials. We shall have to look closer at the method of the allocation of raw materials in the world today. I realise that an international conference meets from time to time to try to allocate the raw materials. But it is worth noting that when we come to examine the military question there never seems

to be any difficulty about getting complete co-ordination among the democracies. A Supreme Commander is appointed who licks all the forces of the various nations into one body, and what is even more remarkable, integrates into that defence force people against who we have fought twice in recent times and through whom we have lost millions of our people. In military operations there seems to be no difficulty about getting our requirements properly and according to our needs.
In my opinion, the United States are not giving us the raw materials for our industries which we are entitled to get. If the Chancellor goes to America in September I hope there will be a serious attempt to get co-ordination, so that there will be a proper allocation of the raw materials available for the people who require them. If that does not take place, then the optimistic expectation of being able to complete this £4,700 million armament programme will be dashed, for it will be impossible to do it and reduce the gap between our imports and our exports. In addition, our people at home will be called upon to make much greater sacrifices than they have ever made.
Our people have been wonderful in the sacrifices they have made already, and we are entitled to expect that any tendency towards stabilising our economy and resulting in fairer shares for all will mean that the people who work in the basic heavy industries, and who may well be asked to work even harder will see greater evidence of an improvement in their conditions.

7.32 p.m.

Sir Albert Braithwaite: It is some years since I had the honour of addressing this House and I do so today with some feeling of trepidation. Our country is in the greatest possible danger. Our financial affairs are moving swiftly in the wrong direction and I can well understand the Chancellor making the statement which he did this afternoon.
I am not sure that our affairs and our relations in industry with the United States are going as well as they should. The closest co-operation between this country and the United States must take place on the very highest and closest level


if we are to carry through this vast plan for the defence of Europe now upon us, in addition to the many other responsibilities which the Socialist Party have in the last few years thrust upon this country.
Like everybody else in this House I desire to see the very highest possible level of social services maintained, but we can impose burdens upon this country that cannot be carried, and so make our position in the world so difficult that we cannot maintain our people at the level we should wish.
Reference has been made to the mining industry. Since I was last in the House the Socialist Party have nationalised it. I am not going to go into the merits or demerits of nationalisation, but the fact is that from this great industry we cannot get the coal that is necessary to run our industries. That is not due to any fault of the miners. I am not decrying the miners' efforts. All I am saying is that the greatest asset which this island possesses, and on which we should be building up our strength and wealth, is not being supplied at the rate which is necessary. So we are in grave danger. What is the answer?

Mr. Tom Brown: The hon. Gentleman, with his past experience, will agree that there has been a continual decline in the mining industry since 1913. It reached its lowest level in 1946. The difficulty is the manpower situation. Today, there are 30 per cent. fewer men working in the industry than there were in 1913.

Sir A. Braithwaite: I agree with what the hon. Member for Ince (Mr. T. Brown) says, but he will agree that under this island there is coal in abundance and that it is our greatest asset. Unless we get it out, sell it and use it as an exportable commodity this country has no chance of being successful in the world's industrial affairs. It has got to be done and it is not a question of whether we have enough men to do it. There are 50 million people in this island, and it may be necessary for Members of the House to get into the mines to keep the country going. Let us face the facts as they are. We cannot live in fairyland any longer. We must get down to the basic things that really matter.

Mr. Emrys Hughes: Will the hon. Member start off in the mines?

Sir A. Braithwaite: I have done it.

Mr. Emrys Hughes: Where?

Sir A. Braithwaite: I know all about the hon. Member's constituency and about the coalfield in Lanark which is worked out.
There are things that must be done. The first things have to be tackled first, and this is one of the prime things that we have to do to put this country right. Whether it is done under nationalisation or under some other method, it has to be done for the future security of Great Britain, and the sooner the House faces up to it the better it will be. If we have not got the right Coal Board let us get the right one and do the job. I see very little progress made in this industry since the Coal Board started. [HON.MEMBERS: "Oh."] I know what I am talking about. There is more machinery in the industry now than ever and there is a very low output.

Mr. Pryde: Is the hon. Member aware that in the Lothians we have scrapped the American machinery and that our men are getting more with picks and shovels than they did with their machines?

Sir A. Braithwaite: They cannot get the same with pick and shovel as with machinery if it is a decent seam.

Mr. Pryde: They are doing it now.

Sir A. Braithwaite: That is not practical. We must get the machines and the men to work, and we must get the railways to take the coal away. That is what really matters.

Mr. James Johnson: Would the hon. Member tell us what measures he would take to get more men down to the coal face?

Sir A. Braithwaite: To get them to the mining industry I would make mining wages as high as in any industry in the country. Mining is a skilled job. It is becoming more and more mechanised. People talk of it as a dirty job, but it is not. It is as highly skilled as that of any operative working at a bench if it is properly run. We have to encourage the


young people to go into the pits more than we have done in the past.
I have given a promise that I will not take up too much time, but there is one other aspect which is not popular with my side of the House and that is the outcropping of coal. Since I started that plan, during the war, we have had 85 million tons of coal and we are on to another 50 million now. The reason why I raised the point about American cooperation was because I wanted to know if the Chancellor was aware that two machines costing £100,000, which has been paid, are lying on the docks in New York waiting to be shipped here. The Americans, however, will not give an export licence for them because there is some question of their being sent to Russia, or of equivalent machines being sent. They will make a difference of 5,000 to 6.000 tons a week when they go into operation.

Mr. Ellis Smith: How long have they been waiting there?

Sir A. Braithwaite: About a month but every minute's delay in the re-armament programme is of importance. We have to get this job done and, if there is any diplomatic obstacle in the way, let it be cleared at the top level.
There may be other things that are being affected in the same way. The Chancellor can do a great deal on his trip to Washington by keeping this country in the closest possible accord with the United States, both as regards raw materials and essential supplies for our vital production.
I was disappointed that the right hon. Gentleman gave no encouragement in his Budget to the worker in industry. He ought to allow men who are prepared to work harder than other people to have a little tax-free money. It would not cost him a great deal to give a little encouragement to people who are prepared to put their backs into their jobs. I therefore hope he will see if something cannot be done in that direction, because it would be an incentive that would give the increased production he wants.
There is no incentive now, with nothing to buy and earnings taxed to the hilt. For goodness' sake, let us look at these things more practically and realistically. We can all be patriotic, and I hope we are, but it is nice to be able to buy something with what is in one's pocket which is not taxed to the hilt.
I regard this country as being in great peril of a complete financial smash unless something is done by the Government to accelerate production, because, quite frankly, we cannot carry our social services unless we put £2,000 million a year on to our general turnover.

7.43 p.m.

Mr. Harold Wilson: I am not sure whether it is in order to congratulate the hon. Member for Harrow, West (Sir A. Braithwaite), on his second venture from the maiden state in this House. Certainly, I could not congratulate him on what he has said about the coal mining industry. I saw a good deal of the hon. Gentleman during the war on subjects not unconnected with coal, and he should be the first to agree that if, during the period he was out of this House, we had not nationalised the mining industry, the continued decline in production to which my hon. Friend the Member for Ince (Mr. T. Brown) referred would have gone on and, by this time, we should have been facing a production of between 100 million and 150 million tons, with all that would mean for our economy.
I do not propose to follow the hon. Gentleman, but I would like to ask him a question. Now that he has said that his policy for the coal mining industry is to increase wages, would he give an assurance, on his own behalf and that of his hon. Friends,' that the resulting increase in the price of coal would not be made the subject of propaganda by the Tory Party? The increase in the coal prices, which is largely explained by the improvement in wages and conditions from the desperately low levels we had before the war, has been the subject of considerable party propaganda by hon. Gentlemen opposite.
It would be right, I think, not to follow the hon. Gentleman but to deal with some of the issues raised by my right hon. Friend. He devoted his speech, as is right, to the two main subjects of the overseas balance and the problem of inflation and rising prices in this country. On the overseas balance, my right hon. Friend said that we are facing a grave situation—graver than might have been foreseen a few months ago. At that time, in April, after I resigned, I said in the House that we could not carry out both


the increased re-armament programme and our export trade at the same time.
It is no satisfaction whatever to have seen events moving in a direction which suggests that those warnings were right, because we are facing a very grave situation. I think my right hon. Friend will agree that in his speech he did not hold out any hope of any remarkable improvement in our overseas balance or indicate much that would improve that situation.
The overseas problem clearly arises from two factors: our exports have not risen to the levels that we had hoped; and our imports, largely due to fantastic world prices, have risen far above the estimates made a few months ago. So far as exports are concerned, we are clearly suffering from the overloading of the system and, to some extent, in certain industries from a creeping paralysis in production through the shortage of raw materials.
In his speech my right hon. Friend was clearly counting on yet further increases in exports of consumer goods, particularly textiles and clothing. I am sure he would agree, however, that the President of the Board of Trade cannot have been encouraged in his hopes of increased ex-ports of textiles from his recent visits to Manchester and Bradford. In those meetings I think it was made clear to him what the difficulties were of even maintaining the present level of textile exports, let alone increasing them, particularly as we must now expect to face on an increasing scale the problem of Japanese competition in many of our traditional markets.
My right hon. Friend stressed that the main problem of our overseas balance is a reflection of the world problem, because the world is at present trying to do too much with the resources available. A great part of this debate has concentrated on the inflationary situation in this country and, of course, the Chancellor was right to place the main responsibility not on anything that is happening in this country, but on the rise in world prices based on the world scramble for raw materials and other essential goods.
The figures of price increases since last June issued a week or two ago by O.E.E.C., which my right hon. Friend quoted, show clearly that most countries have shown a bigger increase in prices

than we have experienced in this country. In fact, only Switzerland and Ireland have shown lower rates of increase in their cost of living than we have had here. Incidentally, those are two countries where no one can say that the pace of re-armament has noticeably quickened in the past few months.
The figures quoted by my right hon. Friend show what nonsense is talked on the other side of the House—not so much in this House, because they have to face this side, but in the country. What nonsense it is when they say that the high cost of living is the high cost of Socialism. The figures for Australia and New Zealand show what nonsense is talked opposite about the high cost of living—two countries where the equivalent of our Tory Party in those two countries got in on promises to reduce the cost of living. So far from it being the high cost of Socialism, my right hon. Friend, the Chancellor and the Prime Minister, too, have been right all along in saying that only an international policy of fair shares of raw materials—fair shares internationally, which is a Socialist conception—would be effective in getting prices down.
But I think it is important that we should not confuse symptoms with diseases in this matter. The international planning of materials can make an important contribution. I think we should all agree about that, but it is unlikely to be effectively realised. It is unlikely that we shall get the other nations to play their part in this international allocation—and even if they do, it is unlikely to be really effective in operation—until we have got at the root cause of world inflation.
The plain fact is that the world is trying to re-arm and to produce at a rate faster than the physical resources can be made available. That is especially true, of course—and I think that this is realised on both sides of the House—of the United States. I realise that whenever I say this, whenever anyone says this, they lay themselves open to a charge of anti-Americanism. I want to refute that charge. I am not making an anti-American speech.
I believe, as I think we all do in this House, that the peace of the world depends on a proper understanding between the United States and ourselves.


When I say "ourselves" I mean of course, the whole Commonwealth. There are very many links which bind the United States with the Commonwealth, not least, to a considerable extent, kinship, common tradition and the fact that we have stood together in two world wars.
But one of the privileges of friendship—I would say one of the duties of friendship—is that one has the right, and, indeed, the obligation, to speak frankly to one's friends and to tell them when the actions that they are taking, perhaps for the worthiest of motives, are endangering common purposes that both have in mind.
My right hon. Friend the Prime Minister, in his historical flight to Washington last year—a flight which, I believe, saved the peace of the world—did not hesitate in Washington to speak frankly, as a friend, on the dangers which American policy at that time looked like bringing on world peace. I believe that it is the duty of all of us to speak frankly, just as we must expect and hope that our American friends will speak frankly to us, even though we may not always like it when they do.
The first matter on which we ought to speak frankly is this. It bears very much on the Motion before the House. If the United States and the Commonwealth are to work together, it is necessary quite frankly to tell the United States what the Commonwealth means to us, and indeed what the Commonwealth means to them. There are very many Americans who do not understand the whole conception of the Commonwealth. There are some who do not want to understand.
If ever I have been tempted to become anti-American—and I did resist the temptation—it has been when I have had to contend with some of the economic theologians that the United States send to international conferences, theologians who base their negotiations on the theme that the Commonwealth, Imperial Preference, and the sterling area are all manifestations of some form of sin. We have had that at many conferences since the war. We have had to resist it.
We have had many times, with some strain to Anglo-American relationships, to make clear the importance of the Commonwealth link to this country, just as in conference after conference we have had to resist their theological demand for the

extension of most-favoured-nation treatment to Japan. I am glad that my right hon. and learned Friend the President of the Board of Trade has continued to refuse to grant that as a right.
I cannot understand why, for the sake of this doctrinaire theology, we had at this critical time in the affairs of the world to have to undergo this onslaught by the United States on the Imperial Preference system at Torquay. Why rock the boat at a time like this in the affairs of the world? We withstood this onslaught. There may be some hon. Members who thought that it was anti-Americanism on our part to resist this onslaught on Imperial Preference, but I believe that the interests of the free world cannot stand this gratuitous and unnecessary attack on the economic links of the Commonwealth.
My right hon. Friend the Chancellor of the Exchequer has made it clear that we are facing grave overseas problems which, as far as we can see, for many years to come will be continuing problems. Our American friends must realise that, just as our trade with the Commonwealth provided the key to our economic recovery in 1945–50, as it did, yet further developments, yet closer links with the Commonwealth—further developments of the preferential system, no doubt—will be necessary in the darkening economic situation that we are facing today.
If they are to get the co-operation they are asking for from Commonwealth producers of raw materials, they must be ready to offer long-term assurances that they will buy the products of the Colonial Empire—the rubber, the tin, and so on—and give the producers of these commodities some confidence for the future.
We were all glad to hear a few days ago that there is to be another Commonwealth economic conference. We had one last September which I think was of great value. I am sure that my right hon. Friend the Chancellor will agree. He and I played a leading part in it, and I am glad that the idea is being carried forward in another economic conference this year.
There is a second issue on which I think we have to speak frankly, and that is on trade with Eastern Europe. Our American friends must be asked to realise that we are not prepared to cut ourselves


off from great and important sources of raw materials in Eastern Europe which are necessary to our economy. We must say to them that we are not prepared to have a blockade of trade with the East. But American pressure all the time is more and more for a complete blockade.
I am afraid that there are many signs that my right hon. Friends are bowing to that pressure, not, I am sure, because they think that it is right, not because they are unaware of the disastrous consequences for our economy of giving in to that pressure, but because they feel that on broader grounds it is necessary to give way to American demands. I do not share the view, and I know that they do not share the view, expressed by the right hon. Gentleman the Member for Woodford (Mr. Churchill) when he said that we must do what the Americans want at all costs. None of us take that view on this side of the House and I suspect that a lot of hon. Gentlemen opposite do not take it. [HON. MEMBERS: "He never said it."] The words are on record if hon. Gentlemen want to look them up.

Sir A. Salter: Sir A. Salter indicated dissent.

Mr. Wilson: I agree with the need for control on shipments of strategic goods to Eastern Europe. In the present state of the world that is sensible and necessary. In fact, I went a very long way myself in introducing and extending those controls. I did it long before the Opposition ever mentioned it.

Mr. Lyttelton: The right hon. Gentleman was President of the Board of Trade at a time when we were shipping very large machine tools which, on the whole, suggest armaments. He knows quite well that it was only after the matter was debated that the controls were accepted.

Mr. Wilson: The right hon. Gentleman knows very well that I was referring to the introduction of those controls which were introduced without any pressure at all from hon. and right hon. Gentlemen opposite. I would remind the right hon. Gentleman that not only the Government but the Opposition as well—and I refer particularly to the right hon. Gentleman himself and the right hon. Gentleman the Member for Woodford—rejected the idea of a blockade of Eastern Europe. I hope that the right hon. Member still takes that view.

Mr. Lyttelton: Certainly.

Mr. Wilson: But it is at present the policy of the United States to force a general blockade—not merely controls over strategic shipments, but a general blockade.
In the "New York Times" of Tuesday of last week, were these words:
The Foreign Affairs Committee of the House of Representatives unanimously approved today a Bill intended to go a long way toward cutting the Russian bloc off from all the free world's significant trade. Its bipartisan backing raised a prospect of the measure's early adoption in the House and perhaps in the Senate as well. The bill would put any un-co-operative allied nation under the threat of losing all aid from the United States, military no less than economic.
I suggest that that is not the way to treat allies, and I say to His Majesty's Government that they really must resist this kind of pressure.
One of the reasons why I feel concern about this was the action of the President of the Board of Trade in his decision on rubber only two days after reiterating the contrary policy—the policy of control but no blockade—which I myself had announced in this House a month earlier. I believe that that action by my right hon. Friend has done untold harm in Hong Kong, and has done great damage to our political interests and political standing in the Far East.
The United States must recognise our need to trade with the world, and, especially, our need of essential raw materials and feedingstuffs. Russia has supplied one-third of our feedingstuffs over the past few years. Clearly, it is very obvious, from what my right hon. Friend has said, that we are not going to have the dollars for buying more feedingstuffs. Must we, then, be denied the grain that our farmers need, and have to subsist on doles of obsolescent dried egg from U.S. surplus stocks because the Americans say that we should not trade with the Soviet Union?
Then there is the third point on which we really must make representations—on the level of our re-armament and the domestic inflation in the United States at the present time. It would be dishonest to suggest, and I am not suggesting, that our own cost of living and other domestic problems could be solved by scaling down our own rearmament programme to a more realistic level. It would be dishonest


to suggest that that, of itself, would solve the problem, but the plain fact is that the world re-armament programme—and this is widely recognised, at any rate, in the non-political world—has confirmed the judgment of "The Times Review of Industry," which used these words, and they are not mine:
Unless steps can ge taken to gear the United States armament effort to the realities of the world economic situation, a widespread inflation may be set in motion. Its results would disrupt production and add to the social and economic difficulties in many countries.
Those were the views of "The Times" correspondent, and there is the real problem. We are faced with the further difficulty that, if any one queries the need, or even the practicability of the particular sacrosanct figures adopted in the United States re-armament programme, and in our own, one is immediately written off as being a fellow traveller, when it is quite clear to "The Times" correspondent, and to a very large and growing number of people in industry in this country, that Western re-armament on the present scale, particularly with uncontrolled civilian consumption in the United States, is coming nearer and nearer to wrecking the economies of the free world. But no one, or very few, will face it. We are rapidly reaching the position in the Hans Andersen fairy story', in which everyone could see that the Emperor had got no clothes, but no one dare say so.
If the United States Government would carry through their arms programme, and simultaneously restrict their civilian consumption by an equal amount by the use of controls, particularly over capital investment, and by fiscal policy—if they were able to do that by cutting civilian consumption, the danger that this programme represents to the economies of the Western world would be far less, except for the heavy demand for particular defence raw materials. But this is not what they are doing, and not what they plan to do. Mr. Charles Wilson, since our last debate in his second quarterly report says this:
As a measure of the production of goods and services by the whole economy, the gross national production, after adjustment for price changes, has risen about 9 per cent. During the next two years, we hope to achieve further increases of 12 to 15 per cent. in industrial production, and 10 to 12 per cent. in the gross national production.

There we have it; an increase of 9 per cent. at present and a further increase of from 12 to 15 per cent. envisaged.

Mr. Osborne: Is not that what we want here?

Mr. Wilson: I will come to that point in a moment; let me first develop this one.
This afternoon, the Chancellor, if I heard him rightly, and I apologise if I did not, referred to a 5 per cent. increase in domestic consumption in this country in the early months of this year, and said that we could not expect to go on at that rate. Yet, the American Administration have already got a 9 per cent. increase in total production, of which only a small amount is on arms, and envisage a further increase in production and a further rise in their total consumption.

Mr. Osborne: Is not that exactly what we want here?

Mr. Wilson: The hon. Gentleman's economic interventions have become notorious. He knows perfectly well that the United States, if they go on with their plan of superimposing a tremendous rearmament programme upon a growing level of production, without any restriction in civilian consumption, will get into their economy a very large proportion of the raw materials required by this and other countries.
I said on 27th June that what this meant was an increase equal to the whole of our national production at the present time, and a call on our requirements of raw materials equal to the whole of our consumption at the present time, and, quite frankly, the world economy, as things are, cannot stand it. We have also the statement of the President of the United States this week, in which he said that the national income was up from 300 billion dollars to 330 billion dollars since Korea, an increase, he said, far greater than can be explained by the increased defence programme.
While I agree with my right hon. Friend in welcoming the dip in raw material prices which is happening at the present time, and which is due mainly to the reversal of the stockpiling policy and the success of my old sparring partner. Mr. Eric Johnston, in his price-freeze, while we agree with and welcome it, we must expect further rises in prices next


year if there is no basic change in U.S. economic policy.
I seriously put it to the Government that the time has now come for a high-level approach to the United States, in which to say to them that, while a substantial measure of re-armament must go on, has not the time come when there should be a high-level inter-allied examination of the strategic necessities of the position and the economic consequences—the world economic consequences—of the present level of production. We are surely deluding ourselves if we think that we can do anything in this country on a substantial scale until that has been done to help us in our economic problems, particularly that of the cost of living.
On the cost of living and the problem of domestic inflation, my right hon. Friend was very frank this afternoon. He did not on this occasion—and he will not mind my putting it this way—put the cost-of-living index to his blind eye and say that he could not see any rise in this country. He was very frank, and he said that the main trouble came from abroad. But, surely, even if we admit that fact, if we accept the £4.7 billion re-armament programme as realistic, there are arguments which suggest that a different financial issue could have been pursued. At the weekend, my right hon. Friend gave some heartening figures, heartening, at any rate, to this side of the House, of the redistribution of income between the richer and poorer classes in this country, as the result of the Budgets of successive Labour Chancellors, and, particularly, my right hon. Friend the present Minister of Local Government and Planning.
The Chancellor showed to what extent the gap has been narrowed between the very rich and the very poor. [HON. MEMBERS: "Oh."] It was a narrowing of the gap which meant both reducing the number of people at the top of the scale and greatly increasing the number of those who moved up from the bottom and hon. Gentlemen opposite did not greet this with any marked enthusiasm. The figures given by my right hon. Friend were very heartening. But the figures ended in 1948. I know it is no good asking for figures for a later date—they probably do not exist—but I think that if they did exist for 1951 they would show that the process to which he referred has been partially,

at least, put into reverse during the past few months. I think they would confirm the experience of all of us that since the Budget the rich have got richer and the poor have got poorer. [HON. MEMBERS: "Nonsense."]
My right hon. Friend's policy has been defined not by myself, but by newspapers which hon. Members opposite like to read and sometimes to quote from, such as the "Economist" and the "Financial Times." The "Economist" said:
The rise in prices is at present being deliberately used by the Government as a means of pursuing higher economic policy. The over-riding need of the British economy in the current year is to set aside the resources of manpower and materials that are needed for re-armament. They can only come out of consumption or private capital expenditure… The Chancellor's budget was based on the explicit assumption that the greater part of this necessary transfer of resources would he effected by means of rising prices reflecting the higher cost of imports…
I agree that my right hon. Friend gave a fair answer this afternoon to certain implications in this suggestion. But more recently—on Tuesday of last week—the "Financial Times" said:
The Chancellor took a major decision of policy. That decision was quite simply to use the weapon of taxation as sparingly as possible, and with deliberate, cold intent"—
and these are the words of the "Financial Times" and not my own—
to rely upon the rise in the cost of living to price the consumer out of the market to a sufficient extent to release resources for the re-armament programme.

Dr. Morgan: On a point of order. Did you hear, Mr. Deputy-Speaker, the remark made by the hon. Member for Kidderminster (Mr. Nabarro)?

Mr. Deputy - Speaker (Colonel Sir Charles MacAndrew): I did not hear it.

Dr. Morgan: He said, "What bloody nonsense." Is that in order?

Mr. Deputy-Speaker: Had I heard it, I should certainly make him withdraw it, but I did not hear it.

Mr. Nabarro: I must protest most vehemently. I did not use any bad language at all.

Mr. Deputy-Speaker: I did not hear anything, and, therefore, there is nothing to be done.

Dr. Morgan: Many of us heard it.

Mr. H. A. Price: I was sitting immediately next to the hon. Member for Kidderminster (Mr. Nabarro), and he did not use those words.

Mr. Deputy-Speaker: As I say, I did not hear him, and there is nothing more to be said about it.

Mr. Price: Is it in order, Mr. Deputy-Speaker, for hon. Members opposite to call my hon. Friend a liar?

Mr. Deputy-Speaker: Certainly not. I did not hear that either.

Mr. Follick: Could the hon. Gentleman tell us what word he used that sounded like "bloody"?

Mr. Deputy-Speaker: Order.

Mr. Wilson: Whatever the boy soprano from Kidderminster said, or did not say, I should hate to think that he and I agreed in our respective definitions of what nonsense means.
My right hon. Friend, in his speech this afternoon, made an announcement about dividend limitation. We on this side think that an important step has been taken in this respect, though its value, as my right hon. Friend said quite frankly, is mainly psychological. It does much to get rid of the provocation of dividend increases at a time when the real value of wage packets is falling, but it does little or nothing of itself to bring down the cost of living, or even to stop it from rising.
However, it is the first step along lines indicated in a recently published pamphlet which hon. Members may have seen. [An HON. MEMBER: "What is the name of it?"] I cannot recall the name of it. I hope my right hon. Friend will now take some of the other steps proposed in that document. What his speech really amounted to is this. My right hon. Friend has told us that his financial policy, enunciated in April, is dead even before the Finance Bill is on the Statute Book. That is a very serious thing indeed.
His reference to the re-imposition of price control which follows an announcement I made just before my resignation is welcome, at any rate to this side of the House. The decontrol policy of two years ago—I know there were many views about that—would be quite out of place

now. Many capitalist countries are now re-imposing controls on a scale far in excess of anything that hon. Members opposite like to contemplate. But I was a little disturbed to hear my right hon. Friend's reference to the adoption of the plus-cost system, because our experience of that during the war and since is that it can be a very wasteful system. I hope the Board of Trade will look at this very carefully again before they go too far in that direction.
I agree with my right hon. Friend in what he said about the utility scheme, We must protect that scheme—which is of great value to the housewives of this country—against those both in the Tory Party and in industry who want to see it come to an end. I think that one of his greatest problems is going to be in the textile industry. On 16th April I referred in this House to my conversations with the cotton industry in which I said to them that I thought more controls would be necessary in cotton, both production controls and price controls, to stop spinners squeezing the weavers and the converters.
On that occasion I said that I accepted the assurance of the industry that they would fulfil these national objectives on a basis of self-control, and I announced that we were letting that matter run for a three months' trial. I should like to ask my right hon. and learned Friend the President of the Board of Trade whether those assurances have been honoured, because there are many signs that great problems are arising in Lancashire at the present time.
The "Financial Times"—a paper I do not often quote—said last week:
 When the price of raw cotton rose from 48d. per lb. to 53d., equivalent yarn prices rose by 9d. per 1b., hut now that the raw cotton price has reverted to 48d. the reduction in the equivalent yarn is only 2d.
It also refers to spinners who are in an extremely strong position exploiting their essential rôle. That suggests that something has got to be done about the cotton industry if those facts are true. They may not be true. I think the House ought to have a statement about this particular point.
I think the present situation shows the dangers of financial planning which is not based on the planning of real resources. The physical capacity of the country at


present is overloaded, and the arms programme itself is in danger. We have the example of electricity. How many awes must we expect the arms production to be held back by electricity cuts as a result of restrictions in capital investment in the industry due to an overloading of our economic programme? My right hon. Friend's speech did contain some sign of willingness to think again on the position he took up in April, at any rate on expedients if not on the main policy. I hope that he will not be weary in well doing.
I believe that now is the time—indeed, long overdue—to make a really dramatic attack on this problem of the cost of living, an attack which will certainly involve subsidies, if not generally on utility clothing, at any rate on children's clothing and blankets, which would make a very big difference to the cost of living of many families in this country.
If it is true, as my hon. Friend the Parliamentary Secretary to the Board of Trade says, that tighter price control of children's clothing would mean a fall in production of children's clothing, even though adequate profits are being made, then this is a serious state of affairs. It raises the question—which I think would be welcome to my right hon. Friend the Minister for Local Government and Planning—whether the Government should not consider setting up one or two factories to produce children's utility clothes and footwear at reasonable prices and bring the trade to its senses.
But these are expedients—valuable but not getting at the root cause of our economic problem. In the last three months my right hon. Friend the Chancellor has made a reputation for sticking to his guns. I respect him for that, even though I believe him to be wrong on the issue on which that reputation was earned, and I believe the economic consequences of that decision have been great. Anyway, he earned his reputation whether he was right or wrong. I put it to him that he is now faced with a much bigger test of greatness.
Anyone can stick to his guns. It needs courage, or stubbornness, call it what you will. It is much more difficult to do what needs to be done now in the interests of the country and the Government and of everything in which we

believe. That is the much more difficult job of admitting when one is wrong, of admitting when the facts prove one is wrong, and altering policy in accordance with the facts.
If my right hon. Friend will do that and, while continuing with a substantial re-armament programme, which I think we all support, scale down that programme to a rate which can physically be achieved and steer his financial policy on to a new and much more radical basis, I believe he will earn the gratitude and certainly the full support of all of us on this side of the House, and, I believe, of the whole country.

Mr. Deputy-Speaker: There are still a great many hon. Members who wish to speak and as the Government side has had at least an hour longer than the Opposition side, I propose to call two Opposition speakers in succession.

8.22 p.m.

Mr. Henderson Stewart: We have heard the usual double theme from the right hon. Member for Huyton (Mr. H. Wilson)—the double theme of an open attack upon America and an implied attack on the Chancellor of the Exchequer. He began his attack on America in a more gentle mood and in more temperate terms than we have heard before, and I was beginning to think that the right hon. Gentleman perhaps had concluded he was wrong in his recent activities. However, he is one of those admirable people who see mistakes in everybody else but none in his own heart.
He accused the Chancellor of the Exchequer of making a mistake and said what a big man he would be if he admitted it. What about the right hon. Gentleman taking that message to himself? He said some extraordinary things, but I thought one of his wise remarks was the suggestion that there should be an allied conference on the distribution of raw materials and so on. That is an excellent idea.
He went on to refer to the Prime Minister's visit to America on this very matter some months ago, giving himself, the Government, and the Prime Minister all the credit for it. The fact is that the imperative demand for the Prime Minister's visit came from the Front Bench on this side of the House—from my right hon. Friend the Member


for Woodford (Mr. Churchill). History will record that that is so, and nothing can be said that will alter the fact.

Mr. H. Wilson: It is a small point, but I was not taking any credit to myself or even to the Government for the decision of the Prime Minister to fly to the United States. What I was saying was that when he got there he spoke frankly to our American friends as a friend and said things to them which I believe saved the peace of the world.

Mr. Stewart: If the right hon. Gentleman goes on saying to America the things he has been saying, he is not going to conserve the peace of the world. All one hears about the right hon. Gentleman's previous contacts with America in America leads one to suppose that perhaps on the whole it is a good thing for the sake of peace that he is sitting where he is now sitting and no longer on the Government Front Bench.
As to the extraordinary remarks the right hon. Gentleman makes from his seat of greater freedom and less responsibility, when he accuses his own Government of a policy which makes the rich richer and the poor poorer and uses those words to describe the present state of our country, he surely has lost all sense of proportion. It is really beyond belief that a responsible person should use words of that kind.
But I want to refer to a relatively narrower matter. The Chancellor of the Exchequer developed the theme, with which we all agree, that the major problem of the moment is that of the adverse overseas balance and the major remedy an increase of production and an increase in exports. We all agree. I am glad the Economic Secretary to the Treasury is present, because I advised him beforehand that I would raise the question whether the Government are taking all proper steps to achieve these two objectives of increased productivity and increased exports.
I say that the Government are not taking all the proper steps, and I want to give the House an example from one section of the engineering industry. I suggest to the Economic Secretary, who I understand is to reply to the debate, that he really must do something to relieve the anxiety and, therefore, improve the productivity of a certain section of

engineering. I refer to the agricultural engineering industry in which, as I have told the House before, I have some interest. It is an industry which is not often mentioned here and on which I fancy hon. Members are not all completely informed.
Here is an industry with a production of something of the order of £100 million a year, which serves the twin purpose of increasing home food production and of increasing exports and therefore of improving the balance of trade. Here is an industry which one would think would be of special interest to the Government. It has some remarkable achievements to its credit. Before the war the total production was only some £6 million. Today it is nearly £100 million. Before the war its total export was less than £1 million. Today it is exceeding £50 million, and those engaged in the industry tell me that next year they are likely to expand it still more.
Before the war, the total production of agricultural and horticultural tractors was something of the order of 10,000 made here in this country. Today the figure is running at the rate of 178,000. I could offer similar figures about drills, mowers, milking machines and so on. Here is a branch of a great engineering industry which is contributing especially well to the needs of the nation at this time. I have spoken of its contribution to the home front with regard to food production. Overseas it is not only a matter of exports by and large. Exports are going to the dollar areas, to the colonial areas and to the Colombo area. For what purpose?—for the purpose of advancing and improving the cause of the impoverished people of the world.
Surely something very careful and cautious must be done about this. This industry has approached the Government. I should say that I am not speaking on behalf of the industry, because I am not entitled to do so, but I am putting forward what I feel is their view and what are the facts of the situation.
The industry has said to the Government. "Our anxiety arises out of the fact, first that we do not know if we are going to get enough raw materials to keep up our present rate of production for home and export trade, and, secondly, we do not know how it will be possible for us to meet the increased export target for which


the Government have appealed." They have asked the Government for an assurance.
I ask the Economic Secretary, who I understand is responsible for the allocation of raw materials, to tell us what his allocation system is. I am not asking him to show any favour to anybody in particular, but we must know what are the allocation principles upon which he works. One would have thought that an industry like this, which is meeting those two high priority needs, exports and home food, would have been fairly high on the list. Is it? If it is not high on the list the food production of the country is going down and exports will fall. That cannot possibly be the desire of the Government, but until they tell us what their plans and methods are and what are the principles upon which they operate, I do not know how we can make any advance.

The Economic Secretary to the Treasury (Mr. John Edwards): I imagine that the main material concerned is steel among matters about which the hon. Gentleman wrote to me. He should understand that at the moment we have not got any allocation scheme in operation in respect of steel, apart from sheet steel and tinplate.

Mr. Stewart: As I told the hon. Gentleman when I communicated with him last night, the industry is concerned chiefly about supplies of pig iron, sheet steel, alloys and high carbon steels. I hope that the hon. Gentleman will be able to help us a little on that point when he winds up.
Let me give one example to show the difficulty in which energetic firms find themselves. Here is one firm—I will not give its name, because I do not wish to advertise it unnecessarily in the House—which started in 1948 to build up a market for British agricultural machinery in America, starting from absolutely nothing. In 1949 their sales commenced seriously on both the East and West coasts of America. By the end of the first year they had sold a quarter of a million dollars' worth of machinery. They carried on and pressed forward, and at the end of the next year they had doubled their exports. They pressed further, and at the end of 1950 they had doubled their exports again.
At that. I understand, they have had to stop their whole advertising, publicity and selling campaign in America because if they did not, the demand for their goods next year would be doubled again, and they cannot undertake to meet the demand because they have not got an assurance from the Government that they will get the necessary raw materials.
That is the sort of problem with which the Government must deal. That is the kind of example that comes to one's notice in one's daily life and which makes one doubt whether this Government of planners is, in fact, planning at all. This is the test of planning. Are we going to get our vital raw materials into the right places? If not, then I say, the Government's planning is a failure. The Economic Secretary should give us some assurance and some encouragement that now, at any rate, steps will be taken to ensure that those industries which have contributed so much are given the attention they need.

8.35 p.m.

Sir Peter Bennett: The Chancellor has said that there is irritation in certain quarters because of high profits and increased dividends. He did not take the opportunity which he might have taken—of course we knew he would not—of explaining the matter fully. Of course, he understands it far more thoroughly than was suggested by what he said this afternoon.
I hope the House will not think I am over-simplifying it if I talk in simple language, but there is a great deal of misunderstanding of this word "profits." A great many people seem to think that it means that there is money in the till for them to lay their hands on. For the last 30 years we have not used the word in my organisation; we have talked about "the margin," because the amount which is left over when everything is taken out is very small indeed, and that is the only portion on which you can lay your hands.
At a time of inflation, profits are bound to rise. The cost of all the production processes increases. Costs consist of materials and wages and charges—coal, gas, transport and electricity; and the cost of them all is rising. We must have an increased margin, therefore, to finance these things.
Next, there is the question of the working capital. As a business increases, as inflation puts prices up, so the debtors increase and so we have to have more money outstanding all the time for doing the same turnover. We have been urged to increase our turnover, especially overseas, which means that we have more money outstanding all the time, and we must have the capital with which to do it.
Stock values are rising all the time. I do not believe people appreciate the rise which has taken place in the cost of some of the raw materials needed in our industry. Take the case of copper. In June, 1938, it was £48 a ton and on 17th July of this year it was £234 a ton. Zinc and lead were between £14 and £15 in June, 1938, and today lead is £180 and zinc £190 a ton.
The point I am making is that we need a great deal more money to finance the stocks we have to carry, which have to be replaced at the higher costs. People sometimes say, "Of course, the cost of materials has risen but firms can still supply at the old price." Firms would be very foolish if they did—and I am not speaking only from my own experience but giving the Ministry of Supply as an example.
Three days after the was devalued the Ministry of Supply put up the prices of the raw materials they were buying to the higher level. Of course, they were right because they sold at what we call replacement value. It is, therefore, essential that prices should go up as we use our stocks because, when we have sold them, we have to replace them. If we sell at what the material cost and have to replace at 50 per cent. or 100 per cent more, we shall not be able to do it.
The argument is sometimes advanced that prices will fall again. Do hon. Members realise what happens when stocks have been increased enormously and then prices fall? Of course, you suffer a loss, and therefore you have to put reserves on one side in case prices fall. If they do not fall the money goes into the accounts and the Revenue will take the profit, but there must be that reserve otherwise you are caught short. At the moment industry is not putting enough on one side to cover a drop in prices, if it should come. Reserves are needed.
I turn next to the question of plant. During its lifetime plant has to be depre-

ciated because, in due course, it must be renewed. But the Inland Revenue accountants use the initial cost when they calculate the allowance which industries may put on one side for depreciation. The amount put on one side for reserves is, therefore, not enough. The result is this.
If a machine cost £1,000 the Government will allow one, if one is fortunate, to depreciate it at the rate of 10 per cent. If one goes on putting aside £100 for 10 years, at the end of 10 years one has saved £1,000 to replace it. Then one finds that the new machine costs £2,000 or £2,500 or £3,000, because costs are so much higher. What is one to do about it? The cost has to come out of profits—the so-called profits—and the Revenue will tax those as profits and will not allow one to put depreciation to reserve. They say "This is profit," and so they tax it.
What, therefore, one has to put on one side is twice as much for depreciation, because the Revenue will take some. Therefore, one has to depreciate plant according to the rising prices at something like from 33⅓ per cent. to 50 per cent. every year. So it is not a case of prices being too high. Actually they are not high enough in order that capital can be replaced.
Today, goods are being sold too cheaply because some of the capital replacement value has not been put on one side. So, industry will run out of cash, and industries are running out of cash all over the country. They are very busy—those that I have referred to—and they want new cash. That is where dividend comes into it. It is not easy to raise new money unless one can show that that new capital will earn its keep. We cannot raise new capital to replace losses because the new capital has got to stand on its own legs and earn its own way, and the Chancellor will not let it.
That is how the Chancellor is making it a little harder for us. We sometimes think the burdens are quite enough as it is, what with chasing raw materials and all the other difficulties. He is now going to make the burden heavier by adding this proposal of the limitation of dividends. I do not think he is quite fair. When he talks of the fact that dividends have gone up rather more than he likes during the


last six months, he also talks about wages having been frozen and of how the trade unions come along—we on this side do not grumble about that—and say to him," We have helped in this freeze of wages. Now our people must have some more." The right hon. Gentleman never reminds us that dividends were held back voluntarily for three years.
Sir Stafford Cripps asked that we should agree to hold prices. We said we could not guarantee that because of rising costs, but we volunteered to try to hold dividends. Dividends were held almost completely in the first year. In the second year there was nearly the same result. The third year a few more people broke away. But for three years the increase of dividends was dammed back, and then the freeze broke. What is the right hon. Gentleman asking now, as a result of three years of voluntary limitation of dividends, for which we get no credit? He says that it irritates people. Now he is going to make it harder.
Those margins I have referred to are reduced by taxation. I have a note here of something Sir Stafford Cripps said:
Some 55 per cent. of all company profits are reqired for taxation; "—
This was in 1950. It is more than that now—
probably not less than half of what is left is used for new capital expenditure in one way or another; so that some three-quarters of the gross profits is already being utilised for essential economic purposes which otherwise we should have to finance in some other way."—[OFFICIAL REPORT, 18th April, 1950: Vol. 474, c. 650.]
If profits are not made, who is to be the main sufferer? First of all, it will be the Revenue who will suffer. Sir Stafford Cripps said that the Revenue authorities would have to find some other way of financing industry. But it goes further than that. The Revenue itself is the greatest benefactor from profits.
Are people aware of the large amount of our national income which is provided by these profits? For instance, Profits Tax in 1950 to 1951 raised £258 million. That is in an official publication. It is not my figure. Cmd. Paper 8203 says that total payments in 1950 amounted to £761 million. The profits we have been talking about go to His Majesty's Government to run the nation. If those profits

are cut, who will make up the amount? Not the dividend receiver, because if the profits are cut his receipts also are cut; he will have nothing; in addition to which he has other taxes, such as Surtax. to pay.
If those profits are reduced the Revenue will not have to hand the amount it wants, and the nation as a whole will have to provide it. What does that mean? It means that the worker will have to provide it. I do not know whether hon. Members opposite realise that if there is a drastic cut in profits the worker will have to pay more taxes.
The Chancellor gave us the figures in his speech, when he said that it would cost £600 million if he did certain things, and he added that that meant 3s. in the £Income Tax. The figures I have given show the amount the Government take from industry in taxation is worth about 4s. in the £.Take that away, and it will be put back where? On to Purchase Tax, Income Tax, and any other indirect tax that can be found. That means that the cost of living will go up.
When hon. Members opposite sneer at profits I ask them to realise that if it were not for the profits of industry the cost of living would be higher than it is, and if they are reduced the cost of living will certainly rise.

8.47 p.m.

Mr. Jack Jones: We are getting towards the close of the debate and I shall probably be the last speaker from the back benches on this side of the House. In my opinion, the debate has been of the usual type: a series of long drawn-out speeches, and very little has been achieved as a result. Indeed, I cannot see any results accruing from the debate we have had today.
However, I congratulate the Chancellor on once again expounding in clear terms—terms which we can understand—exactly what is the position of the country. Shorn of all its trimmings, the fact emerges that we have once again been told that the country is in a very, very serious condition. I can say no other than that it has been conveyed to me, as an ordinary fellow, that that is the position.
For hon. Members opposite to make long speeches about the failure of the Government to put things right, without


advancing a single objective method of how they would put things right, appears to me to be a gross waste of time. The fact is that we are trying to maintain what we have always believed should be possible—a seven days' a week life, pay for the last war, get ready for what may happen tomorrow, although please God it does not, and carry the tremendous burden—and it is a tremendous burden—of the social structure that this Government has, long overdue, brought into being.
The question is how to make that possible. People talk about American aid and all that America does for us. I could talk for a long time about what this country did for America, and what this country has done for the world at large when America was standing wondering why and all about it. I say once again to the House and to America that we owe America nothing, having regard to what we have done per capita per head of the population in the two world wars. I believe that we are completely entitled to everything we may get from America, if we are all in this great venture to defeat the efforts of Communism.
I want to talk primarily about the steel industry from which I come and know a little about. I say to the Chancellor and to the Government Front Bench that the position of the steel industry will be serious six or nine months from now. Everybody knows that the steel industry lacks its vital raw material—scrap.
The Opposition have talked blithely today as if they could put this right. Is there scrap to be had today somewhere in Britain, or anywhere in the world? If so, let them tell us now where and at what price we can get it. But, for heaven's sake, do not merely tell the Government that the nationalisation of the steel industry is the reason why output looks like going down. These are the same people who bought scrap and ore and are still buying scrap and ore—the British Iron and Steel Corporation Ore, Limited, and the British Iron and Steel Disposals, Limited—for the past 30 years, and are still responsible for providing the necessary raw materials.
I have had my correspondence today from my constituency, and it has given me food for thought. I find that 1,500 of my very worthy constituents who are steel

workers are now "signing on" because of the lack of ingots and other things necessary for the rolling and re-rolling processes, and I find correspondence from the coal distributors in my constituency who are complaining that they are not getting adequate supplies of house coal to distribute to the steel workers and others in Rotherham.
Correspondents from branches of my own union are complaining that they cannot get sufficient coal to dry their sweaty shirts when they get home from their daily toil. To suggest that the Opposition, if they got into power, could put this right is a sheer fallacy. Do they suggest that if by a miracle they were returned—because it would be a miracle—they could, over night, improve the coal situation?
I know that they could not. I know that because it would take a lifetime to get the British miners to forget the treatment they had from hon. Gentlemen opposite—if they are gentlemen, as some are and some are not, so far as their industrial relationships in the past are concerned, and I am speaking about the past and not the present. The British miners have long memories.
I want to refer to things which I said nearly six years ago. It is up to us ourselves to get out of these difficulties. Almighty God was good to this country in providing geological wealth. It is there to be got. It is easier to talk about getting it than to go down below and do it. The hon. Member for Harrow. West (Sir A. Braithwaite), in a "maiden" speech, suggested that he could go into the mines and get coal during the Recess. I challenge him that I will make as many tons of steel during the Recess—10 times as many tons of steel—as he will get coal. I think that is a fair offer. Seriously, the House must recognise that unless we find an alternative to the loss of scrap, the present output of steel will be greatly reduced. We cannot get away from that.
The hon. Member for Edgbaston (Sir P. Bennett) is an industrialist with experience. We all respect him because he knows the position from the shop floor level, not from the board room level. Industrialists know that scrap is at a premium and cannot be got. Therefore, we must find an alternative to it, and that is molten metal or pig iron. That can only be produced by more iron ore and


by more coal for coke for the blast furnaces
So we come back again to the seat of our troubles, the production of more coal. Five years ago I said some unpopular things to the miners and I still say them. I know that working at a coal face is a rotten job. But remembering their past experiences, the miners will want to keep a Labour Government in power. I know that they do, because they have had long overdue benefits from this Government. Therefore, they should recognise their obligations and intensify their efforts, giving us Saturday morning working continuously throughout the year until real mechanisation and more trained manpower are available.
The steel workers did it at the beginning of the war, and they have continued to do it. They have one Saturday off in seven, and they have done a marvellous job. My constituents say to me, "Give us the pig iron and the coal and we will produce the steel." I hope that nobody in the House will say that steel output is down because of nationalisation. That is untrue. I foresee that steel production must decrease owing to the conditions in the supply of raw materials, but it cannot be blamed on nationalisation. As a matter of fact, we have put up only half a corporation, and they are still arguing about who is to be the boss.
There is only one solution to this problem and only the present form of Government can find that solution. The miners remember the past history and the treatment they received from the predecessors of hon. Members opposite, who cannot put the position right. The Recess is coming. Some people seem to think it will be a long holiday for hon. Members, but for some of us it will not be anything of the sort. I hope those Ministers who go to America will not talk exclusively to top level Americans, but that they will get down to trade union level and talk to the fellow on the shop floor, at the bench and in the mine.
Tell them the position which Great Britain is in as some of us did in 1942, when we had the privilege of going over there. Tell them they have got to make sacrifices as well as us. If the free world makes the same sacrifices and endeavours then we shall solve our problems. If that

is not done. I can foresee nothing hut disaster. Our people have reason to be disgruntled, but if at a General Election we were to return to the impositions of the past then it would be contrary to all our best interests.

8.56 p.m.

Sir Arthur Salter: I am sorry to disappoint the hon. Member for Rotherham (Mr. Jack Jones). We have before us the Chancellor's statement of our position and his proposals to deal with it. That forms a very adequate subject. We have proclaimed our policy and we shall develop it in the future. I cannot in the concluding moments of this debate summarise or explain it, but I will say in answer to his question that when we come into power we shall not transform the situation over night. The hon. Member's party has been in power for six years, and we shall want more than one night to deal with the consequences.
Like those who have preceded me, I suffer from the fact that we have today been suddenly confronted both with a new factual statement and with new proposals. Like others, I regret that we could not have had the Economy Survey brought up to date as a preparation for the discussion of the Chancellor's proposals. We should have liked more time to study the position and some of the facts and statistical analyses which were given to us by him; they clearly need to be read as well as heard.
Not only that. A factual statement is much more illuminating if it is given with the objectivity and completeness which is possible in a White Paper. If the statement is given as a preamble to new and controversial policies, it is inevitable that it should be to some extent selective. It may give the truth, and nothing but the truth, but it cannot be expected to give the whole truth, or even a balanced summary with no more emphasis on those facts which support the proposals about to be made than those which do not support them.
The Chancellor's statements contrast favourably with those of most of his colleagues both in lucidity and in precision. His statement today is no exception. Still I think it did suffer because of the defect to which I have referred. I would instance, for example, what he said as a preface to his proposals about


dividend limitation. He pointed out, too, that some of the extraordinary worsening of our balance of trade is due to temporary or accidental factors. Yes, but it is no less true that there are great adverse factors, which have not yet been reflected in our statistics, but which are inevitable and imminent. I will refer to some of them in a few moments.
In the meantime, after allowing fully for the considerations which the Chancellor suggested should modify our interpretation, the facts now presented to us are in really startling contrast with the estimates of the Economic Survey and Budget statement of the Chancellor himself of less than four months ago, though no new developments of importance have taken place in that period in the external world which have been reflected in our statistics.
I will not emphasise the truly devastating record of the last month or two. That is perhaps too short a period for comparison, and we have been given reasons for believing it to be in some respects exceptional. But, taking the first half of this year as a whole, there was a visible gap of £554 million as against £117 million last year. After allowance for invisibles, this indicates a deficit over the year of more than £200 million as compared with a surplus of more than £200 million last yar.
The Survey and the Chancellor both contemplated, it is true, the disappearance of this surplus, but they did not contemplate its replacement by a deficit. Already the deterioration is more than twice what was estimated. The fact is that, with one doubtful and minor exception, the results have in almost every important respect been very seriously worse not only than last year but than the estimates of three and a half months ago.
Visible exports have been running at £142 million less and invisibles at £50 million less than the estimate. Imports have risen more both in volume and in price. The terms of trade have gone further against us than was expected. Personal expenditure in the first 15 weeks of this year was £200 million higher than in the corresponding period of last year. Savings in the same period again showed a deficit of about £34 million, in spite of the increase in the interest rate and the momentary improvement by which it was followed.
The one doubtful exception in the tale of woe is that the Chancellor told us that productivity had increased by 1 per cent. more than the Survey's estimate—5 per cent. instead of 4 per cent. Incidentally the House will appreciate that the 4 per cent. estimate of the Survey merely meant a continuance of the rate of productivity of the latter part of last year, not of its increase upon it. I call it "doubtful" because the London and Cambridge Index suggests a small decrease rather than a small increase on the Survey's estimate. Omitting that, then as uncertain, every important factor is worse, and so much worse as necessarily to make us look not only with alarm at the future, but with distrust at all the estimates on which the Government have based and defended their policy.
The increased price of imports and the worsening terms of trade are one factor, though only one, in the dismal record. The Chancellor told us that the rise has, for the moment, halted and may be reversed, and that this may help the United Kingdom balance. It is as well to remember, however, that any increased prices of raw materials have a double effect. They worsen our trade balance, but they greatly help the Sterling Area balance. They are the principal reason for the Sterling Area surplus, which amounted to some 400 million dollars, exclusive of Marshall Aid in the last quarter of 1950, and to 360 million dollars in the first quarter of 1951.
This surplus fell dramatically in the second quarter of 1951 to 54 million dollars. A fall in prices, if it should come, would help the U.K. balance but would quickly land the Sterling Area in a new dollar crisis. Let us not forget that the dollar earnings of Malaya alone have been about equal to our U.K. dollar exports.
Our record is, of course, the more disconcerting because it does not yet reflect any considerable re-armament. It is only in the next two years that the impact of this will be felt. Looking at the whole situation, I think it is difficult to resist the conclusion of "The Times," that the symptoms are those of chronic debility rather than of temporary fever.
I propose in a moment to say a word about our commitments and resources. The former, of course, include re-armament, and on this I wish first to say this —the more because of the speech of the


right hon. Member for Huyton (Mr. H. Wilson)—that we agree with the Government that the present programme is an irreducible minimum. It is ridiculous to say that it is beyond the country's resources. It may be beyond the Government's, but if the Government should fail to achieve it—and in terms of men and equipment and not merely of money—it will be a conclusive condemnation of their competence and their general financial policy.
I want to quote again the truly startling statement made a short time ago by the Parliamentary Secretary of the Ministry of Labour, which was quoted by my right hon. Friend the Member for Southport (Mr. R. S. Hudson) on Monday, that there were actually 850,000 fewer workers engaged in manufacturing munitions and equipment than in 1939. Allowing for some increase, there are now perhaps some 750,000 fewer. Two or three days ago the President of the Board of Trade told us that the re-armament programme would require 500,000 additional workers before 1954. That means that even at the peak of the re-armament programme in 1954 there will be 250,000 fewer workers engaged in it than in 1939, when the population was three million fewer than it is now.
I recall the criticism made in 1939 of the inadequacy of our defence preparations—I was one of the critics—against the potential enemy, which was not stronger than that which now confronts us, and when I contrast what was being done in that year, not only with what is being done at this moment, but even with the number of men required for the manufacture of equipment at the peak of the re-armament programme in 1953–54, it really is a striking contrast. It gives us a framework within which we should consider the whole of the rest of our problems and, in particular, any suggestions that we should try to solve these problems by reducing our defence below what we know to be absolutely essential for our safety.
I want further to emphasise this by quoting the assessment of "The Economist." It says:
The difference between peace and war is the difference between the 3 per cent, and the national income which the British people devoted to defence in the 30's and the 51 per cent. reached at the peak of the war. As against

this difference of 48 per cent. the re-armament programme involves an additional effort, compared with the 30's equivalent by 1953 to about 12 per cent. of the national income. It is, that is to say, one-quarter war. And, after the first heave, it can be reduced to about one-seventh war. It is indeed only too likely to produce the sharpest economic dislocation and inflation when it is imposed on an economy already so fully stretched.…But the reasons for the tensions lie in the starting point, not in the nature of the defence programme. There is no difficulty that cannot be overcome by a realistic economic policy.
Will there be such a policy? At this moment I will make only two comments. In the debate on Monday the Minister of Supply was asked whether double shifts could be extended. He replied:
There is only 0.9 unemployment…and in present conditions one cannot get the labour to double shift."—[OFFICIAL REPORT, 23rd July, 1951; Vol. 490, c. 1727.]
I ask the Committee to reflect on the full significance of that reply. If that is the attitude of the Government, how do they expect to get the 500,000 additional workers—many of whom must obviously come by transfer—who will be required in the next two years?
I would also ask this question. The Chancellor is discouraging investment in new plant by the stoppage of initial allowances, refusal of licences, and so on. He is relying on Departmental procedure to see that the necessary facilities for expansion of the munitions industries are given by the appropriate Departments, the Board of Trade, and so on. Are the Government satisfied that the present machinery is efficient and prompt enough to see that the munitions industries are indeed the beneficiaries, and not the victims, of the new restrictions? This is giving great anxiety to some of the industries concerned.
It is against this background that I want to comment on some of our weaknesses and dangers. First there is the inflation, actual and prospective, in our system. I speak now not of the evil results, admitted and frequently described, but of its extent. The Chancellor explained his policy clearly in his Budget speech. He intended, he said, what he called cost inflation—resulting from the higher cost of imported materials—to be absorbed by the public in the form of higher prices. But his Budget provisions were intended to eliminate the other cause of inflation—the excess of demand over available supply at existing prices.
Some of us pointed out that we did not think the right hon. Gentleman was covering the inflationary gap in the sense in which he had defined it, because his new taxes would certainly not be counterinflationary to the full extent of their anticipated yield. But the calculation of the gap itself was obviously extremely doubtful, based as it was on a series of estimates, each of which was little more than a guess.
I want to suggest a cross-check. For this I would take as a simple criterion the statement in the old "conventional form of accounts" used before we made the present distinction between "above the line" and "below the line," which is useful for some purposes but sometimes misleading for others. I quote from the Financial Statement, Table XIV, that the total anticipated expenditure of all kinds, above and below the line, by the Government in this Financial Year is £4,777 million and the anticipated revenue £4,320 million, a difference of £457 million.
Does the Chancellor really think that in present circumstances he can borrow £457 million by non-inflationary methods? To ask that simple question is to give a better measure and indication of the extent of the patent or latent inflation in our system than his own estimates in the Budget speech.
The Chancellor suggested that he had dealt with inflation because prices had risen here and in America more or less correspondingly. But that only shows, so far as those figures are conclusive, that inflation here is not greater than in America. That is useful for some purposes. It prevents us from being handicapped by inflation, as we otherwise should be, in the competition of America in external markets, but it does not mean that there is not in our rising prices here a considerable element of inflation. I think the Chancellor would agree with that.
There is one important factor which may for the moment postpone the full effect of the inherently inflationary position, but it is in itself intrinsically disastrous and bound to aggravate the evil it postpones. That is the disastrous deterioration in our balance of payments which is the immediate occasion of this debate.
Last year we had a surplus of over £200 million. That was a valuable asset, but

it was in its immediate effect inflationary. The Chancellor reckoned that the acceptance of a discontinuance of this surplus would help him to the extent of £200 million this year in countering inflation. But now he faces a £200 million deficit. That again is, for the moment, counterinflationary. But it cannot go on, and it obviously makes the position worse for future years.
One reflection of this deterioration is, of course, the rise in the sterling balances to which my right hon. Friend referred. We talked, as he said, for years about the burden of "unrequited exports" as sterling balances were released. But they are now going up, not down. We shall have the exact accounts, I suppose, in a few weeks' time, but present indications point to a rise of something like £200 million. This, as my right hon. Friend said, is a case not of unrequited exports but of unrequited imports. It gives a momentary relief—a momentary counter inflationary effect. But again it cannot go on.
It is a form of borrowing of the most dangerous kind. It is short-term, immediately recallable, borrowing. In the years before 1931, as we all remember, we were borrowing short and lending long. And we know what that led us to. Now we are borrowing short in this form as against long-term and inescapable commitments. That, I suggest, is equally fatal. Obviously, too, a continuance of this process is dependent upon a continued belief in sterling which an adverse balance in our payments would quickly undermine. Obviously, too, it would threaten the disruption of the whole of the sterling area arrangements. It would make nonsense of all our projects, Colombo plans and the export of capital to underdeveloped countries and our interest in them.
Let me illustrate this danger by a trivial analogy. I heard of a writer who had a dramatic but short-lived success. At the peak of his success he found that he was doing very well in his bank account because many of the cheques he drew were not cashed. They were put in albums by his fans for their autograph value. His success passed. He no longer had that relief. But, worse than that, as his popularity waned, the cheques that had been put in albums were torn out and they went further to swell his overdraft at his bank. So it might only too easily be with all our sterling arrangements.
I will only mention, without elaborating, the further factors that are not yet reflected, to the extent they may soon be, in our current statistics. There is, first, German competition. That is already beginning to be serious, as our exports to Switzerland show. Very soon Japanese competition will be equally serious. It is a matter of life and death to us that we should produce enough exports, sufficiently attractive in quantity, in quality and also in delivery dates. We are not doing that now, and immediately ahead it will be both more difficult and more necessary that we should.
Then, of course, there is the repayment of the American loan. I think that the first instalment of something like 119 million dollars is due at the end of this year. I will not further elaborate upon the coal position on which the Chancellor has made a grave statement today, or on the oil position which is in all our minds this moment.
Against all these adverse factors we have the continuing increase in production which improvements in mechanisation and the technique of production make possible. These are so important that in no great time they might enable us to overcome our post-war difficulties, to take rearmament in our stride, to restore the losses in the standard of living which the effort of the immediate future requires, and then improve on them, if there was nothing to off set them. Unhappily there is.
References have been made to the shorter working week, and, in some industries, though not in all—and these unhappily, are key industries—a lesser intensity of work, even in those shorter hours. In addition, there are irregularities of supply of components and materials and so on.
Against all these, and I might have added other difficulties, what are the Chancellor's remedies? He proposed four, none of them even attempt to stimulate increased production. All of them are restrictive. There is a further prohibition of imports, which is impossble on any considerable scale without a reduction in civilian consumption, which he proposes nothing effective to secure. There is the elaboration of new price controls, designed to disguise or divert the effects of domestic "demand inflation," and des-

tined to do more harm than good while that inflation continues.
There is to be dividend restriction, on which I will only say that I regret the occasional large increases in dividends, but if we take increased dividends as a whole, they are really almost negligible as a factor in the inflationary position. By and large, the position is that, on the average and on the whole, shareholders have suffered the effects of rising prices without compensation in increased dividends, while wages have risen in correspondence with that rise.

Mr. Nally: I thank the right hon. Gentleman for giving way, but we must have this perfectly clear. Is he suggesting that such hardships as arise from rising prices are heavier upon the shareholders, with whom he is personally acquainted, than upon the working class families, with whom I am acquainted?

Sir A. Salter: I have said that while, of course, everyone suffers from rising prices, there has been very much less compensation in the form of increased dividends to shareholders for the rising prices—very much less, indeed—than there has, in fact, been to wage earners. I said that the wage earners, by and large, have had their compensation, but the shareholders have not. The shareholders have lost. Any reductions secured by the proposed legal restraint which the Chancellor has proposed are negligible in scale in relation to the inflationary position.
Lastly, he proposes credit restriction through the banks, and on that I would ask him whether it is intended to restrict the working capital required, for example, by farmers, as a result of increased costs and increased production, or only to restrict credits for capital expansion.
Those were his proposals, good or bad. They will have very little practical effect; indeed, they can have very little moral effect. They are petty patchwork palliatives. In this, I suggest that they are in accord with the policy of the Government over the last six years, for what is this policy? The policy on the whole, over these six years, has been a policy of palliatives without cures, of controls which sometimes reduce productive capacity in attempting to divert it, of the taxation of capital without equivalent capital creation, of no effective stimulus to


production, of exhortations without incentives.
That seems to me to be the general position that confronts us today. We have had small and inadequate remedies added to a policy which has largely been responsible for the situation which the Chancellor had to meet, and for which his remedies are quite obviously inadequate.
There are, indeed, assets upon the other side. The continuance of the improvement in mechanisation and in the technique of production might be enough, if it were not offset, to get us all over our difficulties. It could do so, perhaps, if it was combined with an intensive and general effort throughout the country, and if that effort was encouraged by competent administration and by wise policy. Without such a policy and administration we are bound to fail and to fail disastrously. With such a policy and such an administration we can survive and we can succeed.
In conclusion I might perhaps—as one who has quite recently been a University Member and addressing as I do someone who comes from Winchester and New College—end up with a Latin tag. Yes, we can survive and we can succeed, but non tali auxilio nec defensoribus istis—not with those leaders and not under the dominance of that party.

9.26 p.m.

The Economic Secretary to the Treasury (Mr. John Edwards): Before I come to grips with the main problems raised in the debate. I feel that I must take just a moment to deal with a matter on which I intervened earlier. I took exception—and I am by nature, as I think the House knows, calm and temperate—somewhat angrily to what the hon. Member for Flint, West (Mr. Birch) had to say about Sir Stafford Cripps.
The hon. Member accused Sir Stafford of having been dishonest. I thought, therefore, that it was right to send for a copy of the broadcast to which the hon. Gentleman referred so that the House might have the benefit of it, and so that my right hon. and learned Friend, as he was, might be completely vindicated from this dreadful charge. In the broadcast, Sir Stafford Cripps made the distinction between the difference that devaluation brought in the case of goods bought from

the sterling area and those bought from the dollar area.
Having done that, he pointed out that certain prices, principally the price of bread, would go up and then he said:
Apart from this increase in the price of bread, there should not be any noticeable increase in any other retail prices, at any rate for the time being. Over the next few months there may be some justifiable reason for an increase in the price of a few articles which are made mainly from imported dollar raw materials, that is, if dollar prices do not fall. The important fact that I want to bring home to you all is that there is no reason whatsoever for any immediate increase in any prices in the shops except bread.
If the hon. Member for Flint, West, took in what was said in that broadcast, I think he will see that there was no ground whatever for the statement that Sir Stafford Cripps said that there were never going to be any rises at all.

Mr. Birch: The quotation of a few sentences from that broadcast clearly gives a different impression, but I defy anybody who listened to it or read it—as I have done several times—to say that he did not get the impression that it was intended to convey the suggestion that devaluation would not make any appreciable difference to prices.

Mr. Edwards: I cannot go on indefinitely, but I have quoted every word in the broadcast that has to do with this particular subject. The clear impression was that there would be no immediate increase except in the price of bread, and nobody is entitled to come to any other conclusion. In any event, I would say to the hon. Gentleman that we on this side of the House thought his remarks in dreadful taste and the kind of thing for which there is really no excuse. It was dragged in as a complete irrelevancy and was the kind of thing which we in this House do not like.
Having cleared my conscience—[Interruption.]—the hon. Gentleman need not make matters worse—may I turn to matters which have been discussed and considered in this debate and to some of the matters raised by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton). I was disappointed both in his speech and in that of the right hon. Gentleman the Member for Ormskirk (Sir A. Salter) because although they analysed the problem, although they talked about the need for a policy, although they sought to deny that we had a policy, at no


point did they really begin to indicate one of their own.
This is serious because the right hon. Gentleman the Member for Aldershot cannot hope to secure strength by negation. Neither the House nor the country will be impressed if the right hon. Gentleman dismisses his own positive policy as he did in the few most general and most vague sentences at the end of his speech. Moreover, the right hon. Gentleman was most inconsistent in what he said. He began by saying that the Government are not controlling inflation. Then he went on to say, "Do less about it." He said that a cantering inflation had become a galloping inflation and in the next breath he said, "Reduce taxation" and presumably have more money to spend with the same amount of goods.

Mr. Lyttelton: I must intervene to ask the Economic Secretary not to carry such a large overdraft on his imagination. I never used such words. On the contrary. the tenor of my remark was that we should try to reduce the credit foundation.

Mr. Edwards: Not at all. The right hon. Gentleman will find when he refreshes his memory from HANSARD, as I have been refreshing my memory from the notes I made, that almost immediately after he talked about cantering inflation he was also talking about the need for reducing taxation.
May I deal with a less controversial point at the moment. The right hon. Gentleman asked if we could give an analysis of the invisibles. I cannot break down that figure. The decline is due to increased expenditure in Korea and Malaya, extra expenditure that may be involved on oil and the lower profits of certain producers of primary products particularly tin and rubber.
I was also a little astonished by the attitude the right hon. Gentleman took to the question of dividend limitation. He was inclined to put it on one side and say it really did not matter. I think that is not an unfair way of putting it. He said the effect would be nugatory, that it would be very small in amount, and that we could not expect to get much out of it.
I want to make it plain—and I pin it on what the right hon. Gentleman said—that in producing this proposal for the

statutory limitation of dividends my right hon. Friend is not actuated by any malevolence. Let us be clear about it. It is not due to any failure on our part to recognise the essential role of profits in industry. It is not because we have overlooked the fact that the purchasing power of money has declined. It is not because we are unmindful of the good part that was played by some companies in the years of dividend restraint. It is quite simply the fact that it has now become an economic necessity to stop further increases in dividend.
Naturally enough, we tend to talk from our own experience and from the knowledge that we derive from the company we keep, and it may be that right hon. Gentlemen opposite are more conscious of the psychology of the company director than those of us on this side of the House. But let there be no mistake about it, we are conscious of the reactions of very large numbers of people to the kind of things that have been going on. After all, it has always been said by us—and I said it myself several times in the debate on the Finance Bill—that it was the secondary consequences of increases in dividends that caused the trouble. In truth, it inhibits our cooperative instincts. [Laughter.] Yes, indeed.
Hon. Members may laugh, but I will show them how. Anything which affects the attitude of mind or the likely behaviour of millions of people in our country and makes the work of those who organise and lead them more difficult is something which any Government ought to take into account. If the right hon. Gentleman would spend a little time talking to any trade union official and would ask that trade union official what is happening in the unions as a result of these increased dividends that have been declared, he would get the answer.

Mr. Lyttelton: The hon. Gentleman may be interested to know that I spent an hour this morning talking to a trade union official on this very matter, and that I did not at all get the impression which the hon. Gentleman is seeking to give. The truth of the matter is that the Government are always trying to draw attention to profits in order to create the impression which the hon. Gentleman is now seeking to create.

Mr. Edwards: I appeal to any of my hon. Friends on this side of the House who are still engaged in the work of the unions to confirm what I am saying. I admit that the total amount of increased purchasing power which may be involved is not great. The fact that it is not great does not mean that we ought lightly to accept these increased dividends. The real difficulty arises from the consequences that follow these announcements. It may be that right hon. and hon. Members opposite are not aware of this. If they are aware of it, certainly from their speeches at week-ends and in the House they have never indicated that they are aware of it, and we can only suppose that they are indifferent to it.
I tell the House—I speak here, I think, from some experience—that there is not a trade union official in the country at present whose work is not being made more difficult as a result of increases in dividends. There is nothing that makes it more difficult to exercise the leadership, the responsibility and restraint that is necessary in our present circumstances.
So I would say to hon. Members, and particularly to the hon. Member for Orkney and Shetland (Mr. Grimond), that even if, as might be, this has some marginal effect on the provision of risk capital, it would, I believe, still be right to stop dividend increases which are having the effect of setting the whole of the trade union movement by the ears and making the work of the union leaders so much more difficult.

Sir A. Salter: I understand the hon. Gentleman to admit that it is not any considerable scale of actual payments which he has in mind; that it is the psychological effect. Obviously, the psychological effect depends enormously upon how far there is propaganda to inflate the idea that dividends are having the effect which the hon. Gentleman attributes to them. I ask the hon. Gentleman to take very special steps to put such increases as have taken place in their right proportion, to explain how they compare with wage increases, and how negligible they are as a factor in the general inflationary situation.

Mr. Edwards: I have always been careful not to exaggerate this and I have always been careful, in the speeches I have made, to bring out the real charac-

ter of capital in business, but I am sure we cannot regard the increase of 18 per cent. in the last month as being the kind of increase that is reasonable.
If I have laboured the point about the effect on workers in industry and on trade union officials, it was because I was most anxious that right hon. Gentlemen should not be permitted to go on behaving as though this were not a real problem, when those on this side of the House, and especially some of my hon. Friends, are having to grapple with it in their everyday work. It seems to us that it is right that the steps now proposed should be taken.
In the concluding part of his speech, the right hon. Member for Aldershot had something to say about the use of the interest weapon which interested me very much. He said the Government recoiled from the use of the interest weapon. He did not then—and I do not know whether he would care to do so now—say what his own attitude is. Perhaps he would tell us whether he believes in altering the Treasury Bill rate. Would he think it right for us to incur an extra £30 million gross, or £16 million net, in this way? Perhaps he will tell us.

Mr. Lyttelton: The hon. Gentleman puts me in some difficulty because to explain this I should have to intervene to an unpardonable extent. Very shortly, I do not believe we shall get a properly planned capital investment without some selective process being used through the rate of interest. What has upset capital investment is that rates are artificially low. I cannot say more in an intervention.

Mr. Edwards: It seems to me that that answer means precisely nothing. I do not think anybody in the House is any clearer now than they were before. I asked a quite simple question—does the right hon. Gentleman, and do his friends, favour increasing the Treasury Bill rate and incurring the net extra cost of £16 million which would be involved? What is the answer? The right hon. Gentleman does not know.

Mr. Lyttelton: If the hon. Gentleman likes, I will explain that I think one will have to use the interest rate to some extent to prune the marginal capital investment. That is the only way we shall get it.

Mr. Edwards: Even now the right hon. Gentleman does not say whether he would alter the Treasury Bill rate.

Mr. Lyttelton: Wait and see until next year.

Mr. Edwards: The right hon. Gentleman now says that we had better wait until next year. It is not good enough for the right hon. Gentleman to say that we recoil with horror from any use of the interest rate—although my right hon. Friend indicated that in certain senses it was in use at present—and then for him to say that we have to wait until next year to know the answer as to whether he thinks what the Chancellor is doing is right or wrong.

Mr. Lyttelton: Again, the hon. Gentleman misunderstands me. He had better wait and see what the policy of the Conservative Government is next year.

Mr. Edwards: It is quite clear that the right hon. Gentleman is in a state of perpetual recoil.

Mr. Lyttelton: What I said was a joke.

Mr. Edwards: The question I put was the kind of question to which we should have liked to have some answer from the Opposition, because we should like to know, if they do not like what we are doing, the kind of things which they would do.
May I turn to perhaps a little more profitable line of country?

Mr. Lyttelton: Hear, hear.

Mr. Edwards: I hope either to carry the House with me or to elicit some further clarification of the point of view of right hon. and hon. Gentlemen. I was very interested in the case made by the hon. Member for Fife, East (Mr. Stewart). I know something of the industry of which he was speaking; I have seen its work at first hand and I entirely agree that the work of the agricultural machinery industry is first-class. But here, of course, in the field of providing material, we are faced with a number of very difficult problems which are not free from controversy.
It may be remembered that I interrupted the hon. Gentleman to say that one of the things involved was steel. We had a general steel allocation scheme until

early in 1950, when we abandoned it—and, I think, quite rightly abandoned it, because I do not suppose anybody thinks controls are an end in themselves or that we should have controls if they were not needed. So, at the present time, we have no allocation in operation in steel. We have announced our intention to introduce a scheme, and I myself have been considerably engaged in recent weeks on that matter. In the meantime we have introduced both the D.O. and P.T. schemes, which, we hope, will help us while we are getting the scheme ready and in the period before the allocation scheme is actually introduced.
But let me make it clear to the House that the moment we begin saying—as the right hon. Gentleman did—that industry must be given these materials, industry must be guaranteed these materials, then we are embarking upon a process of physical control, and that these physical controls may not stop at just an allocation scheme. The mere fact of allocation is an indication of shortage. Steel is a case in point. If we had 500,000 tons more of steel the situation would be very much easier, but we have not got it.
What we have to decide is what we are to use steel for. Clearly, defence, on the one hand, and exports, on the other, must have a high priority. My case is that before we are through with this we shall find ourselves having to support an allocation scheme by other methods—prohibition of certain uses altogether, the limitation of supplies or of manufacture. I hope that when we come forward, as we shall from time to time, with orders relating to these things we shall get what we have not hitherto had—the support of hon. Gentlemen opposite.
Certainly, if the hon. Gentleman the Member for Fife, East, is to be believed, industry itself would like more of this, and if we go on past performance we are very likely to find hon. and right hon. Gentlemen opposite saying, "No, these are not the kinds of things that ought to be done." I hope that I have carried at any rate one hon. Gentleman on the other side with me in respect of one part of our policy at least.

Mr. Henderson Stewart: What I asked precisely was this. The Chancellor has appealed to industry substantially to in-


crease exports. It cannot do it unless the supplies of steel increase. It cannot get that steel now. I was inviting the hon. Gentleman to tell us how we could get it.

Mr. Edwards: I think the simple answer to the hon. Gentleman is that in due course there will be allocation. Meantime, we shall have to use in such a case the P.T. scheme pending the introduction of the full allocation scheme. That is the simple answer; but I was only pointing out that there are certain consequences that flow from a situation of this kind which have not been very much discussed today, and which, I am quite sure, we ought to bear in mind
Let me turn now for a few moments to some of the considerations that were advanced by my right hon. Friend the Member for Huyton (Mr. H. Wilson). I think that he and I would both agree that the "bonfire" of controls in which we both played some part has not made it easier for many of the price controls and the like to be reimposed. I do not think that he or I, who was with him at the time, can be blamed for not foreseeing all the sorts of things that would come upon us in the years 1950 and 1951, but there is no doubt at all that the fact that some of those controls have gone will make it considerably more difficult to reintroduce them.
My right hon. Friend referred especially to the textile industries. He will remember that on 16th April he told us what he had in mind, and he said he had very much in mind
…control over prices, particularly in the early stages of production, so that the converters are not forced up against a price ceiling which would make it difficult for them to expand their deliveries of essential utility goods."—[OFFICIAL REPORT, 16th April, 1951; Vol. 486, c. 1484.]
My right hon. Friend went on to express his view that the cotton industry was fully alive to its responsibilities, and that through the Cotton Board and the leaders of its various sections it had expressed its determination to co-operate with the Government, and to fulfil its national tasks on a basis of self-discipline and self-control, and he said that he therefore felt sure that the industry should be given the opportunity it desired, and that we should see how things worked out. Since then, of course, there has in

the Board of Trade been a good deal of further consideration of these matters.
I do not think anyone suggests that export prices should be controlled, and I think my right hon. Friend would agree with me that it would not be easy to exercise price control only over goods for the home market without the introduction of some measure of production control or some sort of yarn allocation system. There are obvious difficulties and objections about introducing in peace-time production control, in an industry on which we rely so much for exports.
Naturally, the matter is being very carefully considered, but—and I know a good deal about this because, as my right hon. Friend knows, under his guidance I did negotiate the "bonfire" of all the controls in question—my own opinion is that the whole matter is one which could be much better dealt with by voluntary arrangements within the industry, and I hope that such arrangements will be made. That does not mean that in the last resort something else might not be done, but I am quite sure that in this field it would be very much better not to have, if we could avoid it, all the old paraphernalia of the production control.
My right hon. Friend also had something to say about the cost-plus control and expressed his anxiety about it, naturally enough, because, after all, he got rid of the cost-plus control in the Board of Trade when he went there as President. But I would put this problem to him and to the House. If one does not like the cost-plus control how are we to deal with this very difficult problem of securing production from the whole range of firms, within an industry with very different levels of cost? I will content myself by asking my right hon. Friend to consider whether the new system we now propose, of having two ceiling prices, might not avoid at any rate some of the major difficulties that we encountered when we had the simple cost-plus scheme.
I would, however, cross swords with my right hon. Friend on one matter. I was surprised to hear him quoting, if not with approval at any rate with some satisfaction, passages from the "Economist" and the "Financial Times," the latter of which talked about the rise in prices having been deliberately engineered. I do not think any one can really suggest that the rise in


prices was deliberately engineered as part of the Budget policy. It was something that had to be taken into account.
I would submit to my right hon. Friend that, if he is taking the view that the rich are getting richer and the poor are getting poorer, and saying that my right hon. Friend the Chancellor ought to have done something about it, unless we are to take from him the argument about the lower defence programme, but accept the defence programme as it is now, it follows logically from what he said that what he would have liked would be a very much bigger taxation bill than the one we have got under the Budget. That, I think, would be, as my right hon. Friend pointed out, an extremely difficult and serious matter.
In the few moments I have left, I should like to deal with one or two points raised by the hon. Member for Orkney and Shetland (Mr. Grimond). He asked whether the dividend limitation proposal would not, in fact, mean that we would lose revenue. The answer is "Yes," but that does not matter because there would be an equal balance of increased corporate savings and, therefore, that part of the Budget would be met.
The other thing which he mentioned, which is of interest to us all, was the question of further methods to deal with monopolies. My right hon. Friend outlined the kind of things we had in mind in the extension of price control. It is also our intention to make suitable arrangements whereby the Monopolies Commission, which at the present time is so organised that it can only produce two or three reports a year, will so organise itself by way of groups working simultaneously that we get a larger output of reports from the Commission.
We also intend to try to arrange for the enlarged Commission to give more attention than hitherto to the study of the general effect of important restrictive practices, so that we may move more rapidly towards general regulation against these practices which are, clearly, bad in their operation. This and the proposal about retail price maintenance are, I think, welcome supplements to what my right hon. Friend announced in respect of price control.
May I conclude in this way? It is basically true that everything we want to do here depends on the level of production, on the one hand, and on the terms of trade, on the other. Therefore, I would agree whole-heartedly with my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) and other hon. Members who have talked about the need to pay special attention to production. All our problems really boil down to one. The things that we need today, and badly want today, all add up to a bigger demand on our productive resources than can at present be met. Therefore, whatever we may do at the agreed time in various roles. clearly the greatest possible relief would come from an increase in production. Let us consider what a great change would take place if, tomorrow, we had 5 per cent. more output than we had today, and had it in the places where we want it.
I believe—I have not time to develop the point—that in a number of fields, in coal, transport and textiles other than rayon, increases of production are open. to us. Therefore, it seems to me that we must do everything we can to help industry to do a job which we cannot do, and which only industry itself can do, in increasing production, and, in particular, that we should not be held back by restrictive practices of various kinds, which still limit production. If these can be broken down and our productive power freed to expand, as I think it can and should, then many of the problems confronting us will begin at once to be a good deal easier of solution.
I submit that the Opposition have presented no alternative policy; that the views that my right hon. Friend expounded at the beginning of the debate are essentially right; that the job we have to do is well within our capacity; and that with the help of management and workers in industry we shall be able to do it.

Question put, and agreed to.

Resolved:
That this House, recognising the dangers of uncontrolled inflation to the defence programme, the balance of payments and the stability of the economy, urges that every effort be made, both through international action and internal measures, to check the rise in costs and prices and limit the pressure of excessive demand.

LOCAL AUTHORITIES (TRANSPORT COMMISSION PAYMENTS)

Motion made, and Question proposed. That the Draft Local Government (Payments by British Transport Commission) (Adjustment) Order, 1951, a copy of which was laid before this House on 11th July, be approved.—[Mr. Lindgren.]

Lieut.-Colonel Elliot: Could the Parliamentary Secretary give us some explanation of the Order?

10.1 p.m.

The Parliamentary Secretary to the Ministry of Local Government and Planning (Mr. Lindgren): I did not want to be discourteous to the House, but I did not desire to delay hon. Members, particularly in view of the business which still lies before us.
By the Local Government Act, 1948. British Railways, the London Passenger Transport Board, and the canals were exempt from the payment of local rates. but the Transport Commission were required to pay a sum into a pool. The Minister of Local Government and Planning has the responsibility of distributing the sums paid into the pool on the basis of local rateable value.
The Order, which the House is being asked to approve this evening, is an agreed measure between the Transport Commission, who are the persons who pay the rates, and the local government associations, who act on behalf of the local authorities who receive the rates.
There is a precedent for the formula in the Order, and that is to be found in the British Electricity Authority. The general structure of the Order for the payment of the rates by that Authority is a standard varied annually, first of all by the average level of rates throughout the country; and, secondly, by the units sold.
In the case of the railways there is a similar basis, the variation again being the average level of rates throughout the country plus the variation of passenger journeys and freight tons. Both of them are adjustable figures: the sale of electricity in the case of the Electricity Authority, and railway journeys and freight tons for the railways.
The standard year is 1947–48, and the standard amounts are for England £1,810,000 and for Scotland £113,000, and the basis of the standard amount is rates

paid in the year 1947–48. The standard year for passenger journeys and freight tons is also 1947–48. The variation up or down is the variation in the number of passengers and freight tons carried. To avoid violent fluctuations in the amount paid annually, the variations are reduced to a fifth, the variation of one-fifth up or down being according to passenger journeys and freight tons. Having given this explanation, I hope that the House will give us the Order.

10.4 p.m.

Lieut.-Colonel Elliot: We make no objection to this Order. It is an interesting departure which we hope will be extended to the ordinary citizen, for it is an agreed sum between the body paying the rates and the body receiving the rates. That might be of interest to all of us in our private capacities. As the Minister has said, it is subject to a very complicated formula, which I think it would be quite wrong to go into tonight. We make no objection to it, save that it is linked to the amount and the level of rates throughout the country, and that in future years may be a matter which the Minister and ourselves might have more to talk about.

Question put. and agreed to.

NATIONAL INSURANCE (MERCHANT SEAMEN)

Draft National Insurance (Mariners) Amendment Regulations, 1951 [copy presented 11th July], approved.—[Mr. Bernard Taylor.]

UNITED KINGDOM—NORWAY (DOUBLE TAXATION)

10.6 p.m.

The Financial. Secretary to the Treasury (Mr. Douglas Jay): I beg to move,
That an humble Address be presented to His Majesty, praying that, on the ratification by the Norwegian Government of the Convention set out in the Schedule to the Draft Double Taxation Relief (Taxes on Income) (Norway) Order, 1951, a copy of which was laid before this House on 4th July, an Order may be made in the form of that draft.
This agreement is a further one in the series of such agreements which we have concluded since the war, including that with France which I explained to the House recently. This agreement follows the normal, regular pattern. It affects, in the case of the United Kingdom taxation, Income Tax, Surtax and Profits Tax and,


in the case of Norwegian taxes, their national Income Tax, national Defence Tax—which is a further type of Income Tax—and a few other Norwegian taxes.
The general method of double taxation relief will be the same as in the comparable Orders. The agreement is to last for five years and after that period will be terminated by notice from either side. It is particularly satisfactory to have concluded this agreement with Norway because of our close economic and other ties with that country.

Lieut.-Colonel Elliot: We make no objection to this Order. As the Financial Secretary has said, there are long and very close economic bonds between this country and Norway. I am particularly glad to see that professors and teachers visiting this country are exempt from tax in the country visited. The circulation of men of learning is certainly one to be greatly encouraged. That is, among other reasons, a good reason why we should welcome this Order in the series of reliefs from double taxation which are in process of being made.

Question put, and agreed to.

PEDESTRIAN CROSSINGS

10.8 p.m.

Viscount Hinchingbrooke: I beg to move,
That an humble Address be presented to His Majesty, praying that the Regulations, dated 2nd July, 1951, entitled the Pedestrian Crossings (General) Regulations, 1951 (S.I., 1951, No. 1192), a copy of which was laid before this House on 3rd July, be annulled.
There is another Regulation to the same effect and perhaps it would be convenient to the House, Mr. Speaker. if the two were taken together.

Mr. Speaker: So far as I am concerned, I quite agree to that course.

Viscount Hinchingbrooke: We do not consider that these Regulations involve matters of very grave dispute and there is not any disposition on this side of the House to offer strong or marked antagonism to them, or even to divide the House. The object of the debate is to lay out the case, so that the right hon. Gentleman himself should have the opportunity of explaining them to the House and the country, as he claimed

when he indicated originally—last November, I believe—that these Regulations were to be laid.
We find on these benches that the Regulations are, in general, satisfactory. The broad effect of them is twofold. First of all, they take away the legal right of a pedestrian to complete the crossing of a road once he has begun it, on controlled crossings, those which are regulated either by the police or by traffic lights, but only where the traffic flow has turned against him.
The second broad effect is to give the pedestrian precedence at all uncontrolled crossings provided that the pedestrian has started his journey before any vehicle has itself come on to the crossing. A consequential effect of the introduction of these Regulations is that the Minister—I understand by administrative action—intends very drastically to reduce the number of uncontrolled crossings in the country, I believe by as much as two-thirds. I shall say something about that later.
On the change which is to be made at the controlled crossings, the right hon. Gentleman appears to have rejected the advice of his own Road Safety Committee in their Report of February, 1949. that a pedestrian who has started over a crossing should continue to have precedence over vehicles on that crossing. That is to say, what the Road Safety Committee evidently wanted to do was to preserve the status quo as originally enacted in the provisional Regulations made in October, 1934, which gave the pedestrian a right of way at such controlled crossings.
I uphold the Minister in the decision that he has come to, and it is, of course, fundamental to the new Regulations. Those of us who drive along the roads know how irritating, and indeed dangerous, it can be when one or more pedestrians already on a crossing when the lights are turned to green continue to complete that crossing; and it is not only the initial one or two on the road who might have a right—and the motorist may be prepared to let them go forward—but the string of people who follow on behind them, even including those already on the pavement thinking that they themselves are in the right in going past. Many of us have noticed what con-


siderable traffic congestion ensues when the lights are turned to green and the vehicles have the right of way because of that. Therefore, we on this side of the House are glad that the Minister should have made that change.
The second recommendation of the Road Safety Committee would appear to be—using general language—that if a vehicle is turning right or left at an intersection a driver shall give precedence to a pedestrian on the crossing in the road into which he is turning. By these Regulations the right hon. Gentleman has clearly rejected that piece of advice, too, and here, I think, he is on somewhat less safe grounds. If a pedestrian has no legal right to cross when the light is green for him because a vehicle opposite him has already turned left across his path, when has a pedestrian the legal right to cross? I do not think that the right hon. Gentleman or, indeed, any court of law could possibly give the answer.
This afternoon I submitted a diagram of that situation to the right hon. Gentleman and forewarned him, and I hope he will be prepared to say a word upon that subject, because it is a most crucial and difficult situation and nobody can now say, as a result of these Regulations, precisely what the law is. The Pedestrians' Association, who are very much concerned with this matter, have given considerable weight to this in the representations that they have made against the new Regulations, and their views ought certainly to be taken into account.
I suppose that the only true answer to that complex situation is the increasing provision of an all-red period for traffic lights. Where there are no traffic lights and a policeman is concerned, care should be exercised by him to see that there should be a period when no traffic is crossing at the intersection in order that the pedestrians may make their diagonal journey across one road and then cross the other road at right angles to it.
I should like to know from the right hon. Gentleman what the policy is about the provision of more all-red equipment for traffic lights. I have heard from one source that owing to re-armament, curiously enough, and the requirements of the Services from those firms who are accustomed to make this equipment, it is not so

easy to get at present as it was a year or two ago. To make the position as safe as it may be, and to secure that busy intersections are given the maximum provision of safety, it is important to lay on this extra piece of electrical equipment necessary for the provision of an all-red period.
In spite of that, one appreciates that it is almost impossible to provide by law for all stages of the dangerous relationships of drivers and pedestrians at these busy intersections. I can only point out that even as a result of these Regulations, which go far to improve the general position, the courts will be involved in a great number of conflicting judgments on this matter. Whether after some period has elapsed it will be possible to amend the Highway Code again in the sense of the majority of judgments in the courts, I do not know.
I can only express the hope that to give publicity to the general situation, and to bring something forward in public which will act as a deterrent both to drivers and to pedestrians, the right hon. Gentleman will say either that important cases in the courts arising from this conclusion should be well publicised or else that he is prepared to amend the Highway Code appropriately.
So much for the controlled crossings. The provisions as to the uncontrolled crossings appear to us to be quite satisfactory in general, but there are one or two points which arise out of them which I should like to raise. First, there is the lighting of beacons. As a driver and as a pedestrian I have never been impressed with the value of the Belisha beacon. I know the right hon. Gentleman has taken considered advice upon this matter, and that it goes to show that they should be retained.
But when I approach a crossing as a driver or look for a crossing place as a pedestrian, I invariably look for the studs in the road and the zebra markings. When there are so many lamp-posts and tramway and electric light posts and other obstructions on the pavement, as well as so many coloured advertisements on the shop fronts as there are at present, it is impossible easily to mark a Belisha beacon.
I do not see that they need be retained. If they are to be retained they ought to be lit. The real value of a Belisha beacon is


at night or in fog as something which clearly marks out, both to the driver and to the pedestrian, where the new uncontrolled crossing is. From now on the uncontrolled crossing will be a rather dangerous place. It must be readily observed by all who use the road.
Perhaps the right hon. Gentleman would be good enough to tell us something about the programme, if any, of lighting these Belisha beacons, and some estimate of the cost involved. I understand that the new uncontrolled crossings will be lighted from above as soon as possible. Therefore, it should not be very difficult or expensive to carry the wires a little further and put them in the beacons themselves.
Secondly, I should be grateful for a little elucidation about the value of this 45 feet no parking distance which the right hon. Gentleman has introduced for the first time. I am a little concerned that, especially in London and in busy cities, where there are a large number of uncontrolled crossings a fair amount of valuable space for parking will be neutralised as a result of this no parking distance.
What is the real reason for it? We have not been told. The right hon. Gentleman has made no statement and we cannot discern what it is from the Regulations. One has to guess. I suppose the reason is to give motorists a clear sight of any pedestrian who may have started to cross at a crossing. Of course, there is some value in that, but I should like to know whether, in the Minister's view, it thoroughly outweighs the disadvantages.
Another small matter is that of the new sign, mentioned in the Second Schedule, which is to be put down upon the roads. It appears to be wrongly placed. If the purpose of the sign is to prevent the drawing up and parking of vehicles, the sign ought to be on the roadway at all times and not upon the pavement. The Regulations provide that it must be put on the pavement always unless there is no pavement or unless the pavement is of some rough material which cannot easily be painted upon. I should have thought that clearly it ought to have been put on the road at all times.
My final question is about the administrative arrangement of which I spoke

earlier. I understand that the right hon. Gentleman intends to reduce the number of crossings by two-thirds. I think that there are now 30,000 crossings in the country. That means that if the work is done quickly, by the time these Regulations come into force there will be only 10,000 of these uncontrolled crossings by the end of the year as against 7,000 controlled crossings.
I understand that some local authorities are rather apprehensive about the speed at which this is to be done. They wonder whether it would not be better to carry the matter forward in stages and to reduce by, say, one-third by the end of this year and then see where we get. If that proves a success then, next year, we could reduce by another one-third.
I should have thought that that was a reasonable idea. Perhaps the right hon. Gentleman will tell us the details of his programme for reducing the number of uncontrolled crossings. The more the uncontrolled crossings are reduced, the more danger there is of jay walking. If people on the footpath want to cross the road to a house opposite, and the crossing is 100 yards away, they will have nothing to do with it. It is quite clear that they will cross the road as it is. I am afraid that, if the number is reduced, it will mean that the motorist, who will be trained to take account of the places of these crossings in the road and to slow down for them, may fail to notice that many pedestrians are crossing the road.
With these words, I think we can broadly accept the Regulations, and express our gratitude to the right hon. Gentleman for doing something to advance the interests of road safety in the country.

10.26 p.m.

Mr. Geoffrey Wilson: I beg to second the Motion.
This is one of those happy occasions on which a debate is taking place on nonparty lines. I think we can all welcome the Regulations, because hon. Members on all sides of the House will deplore the very heavy road casualties which are taking place at present, and, presumably, one of the purposes of these Regulations is to reduce the appalling number of casualties on the roads.
I think it was the right hon. Gentleman's Parliamentary Secretary, Lord


Lucas, who recently, in an interview with the Press, drew attention to the fact that more than a million people had been killed or injured on our roads during the six years of peace. In the last issue of "Safety News," the journal of the Royal Society for the Prevention of Accidents, it was observed that, in the first four months of this year, the total deaths on the road were 1,489, which was an increase of 7 per cent. on 1950, and only 26 per cent. less than 1938, and that the total non-fatal accidents was 57,546 during the same period, which was an increase of 14 per cent. of last year, and only 10 per cent. less than pre-war.
The interesting point about these figures was that the figures of pedestrians killed and injured during those four months were 7,440 children, an increase of 409, and 10,738 adults, an increase of 1,386. All these facts and figures are well enough known to those persons who take an interest in road safety, but they are not sufficiently appreciated by the public, and, as the majority of the pedestrian casualties occurred in built-up areas, I think we should look at these pedestrian crossing regulations in relation to these casualties. In so far as they do assist in reducing them, on all sides of the House we will welcome the Regulations, and it is only in order to examine them and to see that they really are the best possible to be devised that we are having this debate tonight.
The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) has raised a number of points in connection with the Regulations, and I should like to mention just a few more. First, it would appear that these Regulations—I am referring both to the London ones and the general ones, which are identical—give a definite precedence to pedestrians on uncontrolled crossings, but they do not specifically state that a vehicle has precedence on a controlled crossing when the police or light signals are in their favour. They merely state that the precedence is the other way round on the uncontrolled one. I am wondering why that is so, and whether it may not lead to some misunderstanding.
The noble Lord referred to "jay walkers," an American term which we have adopted and which we all understand, but what happens with a jay

walker if he starts off on a crossing and then takes a short cut, which happens so frequently on these crossings? What is the legal position in such a case? If the pedestrian starts off on the stripes and then goes off at an angle, presumably he is not observing the Regulations
I have one other point with regard to paragraph 7. The noble Lord the Member for Dorset has referred to the setting up of a closed area where there should be no parking. I am not sure what is the purpose of 7 (a) and (b). It states:
A vehicle shall not by Regulation 6 of these Regulations he prevented from stopping in any length of road on any side thereof, if the driver is prevented from proceeding by circumstances beyond his control or it is necessary for him to stop in order to avoid accident, or for so long as may he necessary—

(a) to enable a person to board or alight from the vehicle;
(b) to enable goods to he loaded on to or unloaded from the vehicle;—"

That is an exception in favour of a vehicle which might enable a delivery van to be parked almost on a crossing and unloaded over a prolonged period in such a position that a pedestrian could get on to the crossing and come out blind from behind the vehicle.
That might be dangerous for motorists approaching the crossing and the person on it. On the other hand, we have to consider the amenities of the buildings alongside the road where the crossing is situated. I wonder how this provision will work. It seems to me to depend largely on timing. Most of the other points have already been referred to, and I would reiterate that we welcome the Regulations in so far as they will assist in preventing the high rate of casualties on the roads.

10.32 p.m.

Mr. Burke: I only want to ask the Minister one or two questions. Hon. Members have said that these Regulations are designed in the interests of road safety. I wonder who they have in mind, because it seems to me these Regulations will make it much more difficult for pedestrians to keep alive. First of all, the number of controlled crossings is going to be reduced by two-thirds. On these crossings there is an element of safety for pedestrians, and that is to be seriously reduced. A pedestrian will have to walk a considerable distance to find a crossing and in many cases he will consider it too far to walk and will get across the road without a crossing.

Mr. G. Wilson: Would the hon. Gentleman agree that if there are too many crossings, then they come to be disregarded by motorists and do not help, and that fewer crossings, better marked, may be safer?

Mr. Burke: That may be so, if there were too many, but there are only 30,000 throughout the whole country.
I wonder how the Minister has come to the conclusion that 30,000 are too many and why they are to be reduced to the number of 10,000. That, at least, seems to me to be far too small a number. Apparently, pedestrians have no right at all on other crossings. If a pedestrian gets half-way across, even if the vehicles on one side are considerate enough to stop, the vehicles on the other side may start forward, and he is going to be in the middle with no island or any other form of protection.
These Regulations are most wicked from the point of view of the pedestrian, and they ought to be looked at again, especially in the light of the alarming figures of casualties on the roads.
I have only just heard about the Regulations but, having listened to the speeches from the other side of the House and having heard hon. Members say that they are in the interests of road safety, I should like to know whether they mean that they are in the interests of the pedestrian and what rights are to be left to the pedestrian at all. Consider the intersections of two roads. The pedestrian, obviously, has the right to cross when the lights are in his favour. But if a vehicle is coming in from the left the pedestrian has no right at all; the vehicle has the right to proceed. Presumably, the pedestrian has to dodge back again or dash forward and give way to the motorist.
I am sorry that I do not understand this matter as well as I might, because I have not had a chance to read the Regulations, but I hope the Minister will explain to me how he thinks they will help the pedestrian from the point of view of his safety.

10.36 p.m.

Sir Austin Hudson: I am very glad of this opportunity, even at this late hour, to say a word or two on this question of pedestrian crossings.

As my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) said, we are not opposing these Regulations but have merely put down the Prayer in order to raise this debate.
The reason I want to say a word or two on this subject is that I happened to be Parliamentary Secretary to the Ministry of Transport just after the pedestrian crossings—the Belisha beacons, as they were called—were first installed, and that during the four years I was there I had the responsibility of trying to make the pedestrian crossing system work. I think it should be said in the House that Oliver Stanley, whose recent death we deplore, was the person who, as Minister of Transport, really got going with pedestrian crossings. Mr. Hore-Belisha who followed him had his name attached to the Belisha beacon which was the symbol of the pedestrian crossing.
In the four years that I was at the Ministry I always regretted that the pedestrian crossings, the Belisha beacons, were, on the whole a failure. People did not use them enough. As I used to say at the time, the great use for them was that children could be trained to cross the roads at the Belisha beacons—those yellow-topped striped posts—because a child could be taught that those were the places where he should cross and at no other place.
On the whole, however, I think they have been a failure, and the reason, in my view, is that we shall never reduce accidents unless we can persuade people —pedestrians and others—to think a little less of their rights and a little more of their duties to their fellow men. If we could persuade people that it is their duty to cross at pedestrian crossings as far as possible and not at other places, and for other road users to give way at those crossings, instead of being selfish and insisting on their rights, we should get on very much better.
I should like to give an example of what I mean. We all know that certain of our roads out of this great centre of London have cycle tracks. We always see a number of cyclists who will cycle on the road because they have the right to cycle there and because they wish to demonstrate that right, even if they are preventing the rest of the traffic from free passage along that road.
Another example, which is the sort of thing we should be discussing tonight, is the pedestrian—we have all seen him—who crosses as slowly as possible in order to demonstrate his right to be there. We also know the chap who goes across as quickly as possible and says, "Thank you, very much." If they all did that, how much better things would be.
These Regulations may be a step towards bringing order out of chaos. The police are over-worked, and also undermanned in London. but I wish they could impress on all road users—not only motorists—a sense of their responsibilities All who have been to the United States of America know that the pedestrian does not cross the road except at the lights and when the lights are in his favour. That is especially the case in New York. The police see that it is so. If we could persuade people in this country to do the same thing, that would be an advantage.
The voluntary organisations in this country can do a great deal to educate people to what I would call the right point of view. I do not refer only to the Royal Automobile Club and the Automobile Association, but also to the Pedestrians' Association and the cyclists' organisations. If they would preach the idea that we have to work together to prevent accidents I am sure the number of accidents would diminish.
Londoners are very difficult to change in their habits, and it seems to be firmly believed by them that they can cross the road at any place. When a motorist nearly runs into them they swear at the motorist. If we could get it into their heads that they should use the pedestrian crossings I am sure we should avoid many of the accidents which take place these days.
What I am trying to say is that many accidents could be prevented if we could educate everybody to be less selfish than they are at present. This is not a party matter. There are more pedestrians and cyclists than there are motorists, and any organisation which sets out to protect that section of road users against another will have a greater number of people supporting it than those who support the other section. But I am sure the House will agree that what we want is a change of mind rather than legislation. We are praying against these Regulations, but not, as I have said, with the intention of

dividing. If they draw attention to what is happening and to the duties of pedestrians and, by so doing, prevent accidents, the result would be greatly to the advantage of human happiness.

10.44 p.m.

Mr. Janner: I want to take up the time of the House for a few moments, first of all to say that I was a little sorry that my hon. Friend the Member for Burnley (Mr. Burke) cast some doubt on the intentions of the Minister. I believe the Minister has given a considerable amount of thought to this important question. It will be accepted, I know, by all sides that he has been extremely anxious to consult with those who have the interests of pedestrians and others at heart and who have desired that we should have something definite instead of the anomalous position which hitherto has existed in connection with pedestrian crossings.
The position has been very uncertain. Different courts have given different rulings with regard to the rights of people on pedestrian crossings, and few, if any, have understood what their actual position was from a legal standpoint in relation to use of the crossings. One could expect that, because the courts were not at all sure about what was happening, and how they ought to decide matters. Consequently, one had one court giving a different decision from that given by another court about practically the same set of circumstances. I agree that there are points which require elucidation. No one can possibly devise a set of regulations which, in the first instance can be said to be 100 per cent, perfect.
It has to be a case of trial and error. It is unfortunate that a matter of this description should become a matter of trial and error, since accidents may be involved, and, unfortunately, lives lost. But I do not think one can devise straight away—attempts have been made before, one must be fair and frank about that—a set of regulations which is 100 per cent, fool-proof.
So far as these Regulations go they at least clarify the position regarding the crossings. They adopt certain tried methods which have been found effective in saving accidents and saving lives. Take, for example, the zebra crossing. which was tried in my constituency and found to be very useful for marking the


crossings and preventing accidents. Many other methods have been incorporated in these Regulations, and I believe that, as an attempt to deal with the position, they are as good as one could possibly expect without putting the whole of them to the test and finding out their deficiencies.
I agree that there ought to be a sufficient number of crossings to enable pedestrians to go safely across the roads. On the other hand, there is the possibility that if there are too many of them they will be ignored, and people will not use them. Provision of crossings can be overdone. If one can get pedestrians to be crossing-minded, as it were, to realise that they have protection somewhere and have a definite right there. which is in priority and has precedence over any vehicle, one would be able to give them an opportunity of crossing the road without the fear of being run down, except in so far as there is negligent driving, which cannot be prevented by any regulations. That can only be prevented by stiff sentences in the courts.
I think the House ought to express gratitude to the Minister for the time which he has given to this matter, for the manner in which he has received recommendations and the applications made to him from time to time and for his realisation of the fact that this is a tremendous problem. Accidents and deaths on the roads must be reduced and prevented as far as possible. I think that these Regulations will to some extent clarify the situation.

10.50 p.m.

Mr. Geoffrey Hutchinson: I only wish to intervene for a few moments to put a question to the Minister. Why has it been considered necessary to provide in the London Regulations that no new crossing which shall be established on any road by the local authority unless the establishment of that crossing has been approved by the Minister? So far as I can see, there is no corresponding provision in the General Regulations. Why has it been considered necessary that the Minister's approval should be obtained for the siting of a crossing in London when his approval is not considered necessary in the provinces?
I should have thought, and I suggest it to the Minister, that the siting of a

pedestrian crossing is essentially a local matter, and one which might well have been left to the good sense and discretion of the local authority. In the London traffic area the Minister is not dealing with small local authorities; many of the authorities are very big indeed, able to command the services of experienced road engineers to assist them in the siting of pedestrian crossings. That is precisely the sort of thing a local authority might have been trusted to do. Outside the London traffic area, that is the case; why, then, is there this distinction for London?
I say this in no partisan sense, but here we have precisely that sort of bureaucratic interference with the discretion of a local authority which adds a great deal to the cost of local administration, and involves the employment of a large number of officials in the Minister's Department whose services might be dispensed with if more was left to the good sense and discretion of the local authorities. Is not this a matter which the right hon. Gentleman could safely entrust to the local authorities in London?

10.53 p.m.

The Minister of Transport (Mr. Barnes): My hon. Friend the Member for Burnley (Mr. Burke) put a very direct question, and a very vital one, whether I approached this problem from the standpoint of the pedestrian or the motorist. My answer, as direct as his question, is that my main concern is that of the pedestrian. In this grave and grim problem of road accidents, he is the most vulnerable element, but we must keep in mind, in considering road accidents today, that every citizen is a motorist.
We have this prejudice developed against motorists, but today every citizen rides in motor buses, or cars, as well as trains, as the case may be; goods are conveyed by motor lorry and van, and we do not contribute to the solution of this problem—which is a most serious and perplexing one—if we approach it from the point of view of the pedestrian or the motorist.
The purpose of these Regulations is to try to clarify a situation which is becoming increasingly difficult.

Mr. Burke: Is it not equally true that every motorist is at some time a pedestrian?

Mr. Barnes: That is very true; but. from whatever angle one approaches this problem, one should try to get at it from the point of view of realities, and not from the point of prejudices.
I think I can pick up many of the points raised tonight if I recall the circumstances which have led to the submission of these new Regulations. As the hon. Gentleman the Member for Lewisham, North (Sir Austin Hudson), pointed out, it was the late Mr. Oliver Stanley, when he was Minister of Transport, who first began to popularise the idea of pedestrian crossings in this country, and, in the 1934 Act, they were given legal basis. They went on for a considerable number of years, as my hon. Friend the Member for Leicester. North-west (Mr. Janner), pointed out, with different legal decisions being made, until we had the decision of Lord Porter in 1949, given in a House of Lords judgment.
He levelled very severe criticism against the existing Regulations. He stated that they were ill-conceived and ill-drafted and could not be defended. As the result of that judgment, the legal validity of the whole of the existing Regulations was more or less undermined. My Road Safety Committee immediately gave their attention to the problem and submitted a number of recommendations to me. At that stage, I made it clear to the House—because Hon. Members were pressing me to put these recommendations into new draft regulations—that we were having considerable difficulty in giving them a clear legal definition.
There were points to be considered like that raised by the noble Lord the Member for Dorset. South (Viscount Hinchingbrooke), about the vehicle which has turned left or right, as the case may be. It was on such matters that we were giving considerable attention, and I could not get a legal draft which satisfied me that it would stand up in any court of law or which would be clear and simple. When one came to the right of the pedestrian on the light-controlled crossing, we had again a conflict of rights.
Obviously, the motorist considered he had the right-of-way when the light was green and the pedestrian on the crossing considered he had the right of the crossing. As the noble Lord the Member for Dorset, South, pointed out, after that one had a flow of other pedestrians probably not on the crossing when the lights were

changing. It became impossible at that stage to be able to define in clear, simple, and understandable terms the rights involved. Some of these crossings, like those at Hammersmith, are particularly complex and difficult and, in endeavouring to frame new regulations, it was no use dealing with one type of legal criticism and plunging into a series of other difficulties.
After the most exhaustive examination of this problem, in which I had. the assistance of a number of well-informed people, legal and otherwise, I came to the conclusion—and I make not the slightest pretence that we covered all aspects of this matter—that if we were to start on it, it was desirable to get at least a clear and unchallengable definition of the right of the pedestrian, anyway on some types of crossings. The decisions that were made were to the effect that the uncontrolled crossings should be the ones upon which we should give the pedestrian the legal preference.

Mr. Hargreaves: Are we not taking away, by these Regulations, the pedestrian's rights on light-controlled and police crossings? How is the pedestrian, particularly the aged and slow, to differentiate between a police or light-controlled crossing and an uncontrolled crossing? We are destroying a right and habit which has been built up over a great many years. The ordinary pedestrian is not able to make this differentiation.

Mr. Barnes: The hon. Gentleman le making a speech rather than trying to elicit information. I think he is quite wrong. What we are dealing with here is the legal right of the individual. The position on controlled crossings will be dealt with by directions in the Highway Code which the court can take into consideration. It is a great advantage, in my view, to establish beyond any doubt the right of the pedestrian on the uncontrolled. crossing.
In the time we were coming to this decision the Road Research Laboratory was carrying on experiments with 1,000 crossings which we had striped. These are the zig-zag crossings. Their observations indicated quite clearly that the behaviour of the pedestrian and the motorist improved considerably in relation to the striped crossings. It was on the evidence submitted to me by the


Laboratory that I came to the decision that the crossings, including the uncontrolled crossings giving legal preference to the pedestrian, should be striped.
I have experience of a road along which I have travelled frequently for years. There are a number of crossings on that road, but I have never seen a person crossing on them. In time, some 30,000 crossings have been built up by local authorities, and that has undermined the respect, authority and the behaviour of pedestrians towards these crossings. in the new policy we are laying down I want to make it quite clear that 10,000 is not an arbitrary limit, but that it does involve—and this applies to what the hon. and learned member for Ilford, North (Mr. Hutchinson) said—roughly only about one-third of the present crossings of local authorities.
A strong and justifiable case in future must be made out for additional crossings. That will compel greater attention locally to the build up of crossings in the future. Furthermore, the plastic material that will be used at these crossings is now very scarce, and to get this done effectively we must have the whole of these 10,000 new crossings put into operation in a relatively short time. Nevertheless, that is not an arbitrary figure; it is a commencing figure and we shall build up on that basis. The tests whether a crossing should be added or not will be much more severe.

Mr. John Arbuthnot: Before the Minister leaves the question of the number of crossings, may I put this to him? If the figure is to be reduced by two-thirds, the town that has been moderate in the number of crossings will be penalised compared with the town that has been lavish.

Mr. Barnes: No, that is not so. All these matters will be taken into consideration in arriving at the eventual figure.
On the point raised by the noble Lord the Member for Dorset, South about the red phases, these will be introduced when we consider that they represent an advantage, but each case must be treated on its merits. His contention that the spacing of 45 ft. from the crossing would reduce parking space is quite true, although we shall take the circumstances

into consideration. We want this reservation because it is most undesirable that these crossings should be masked by vehicles. One of the most prolific causes of accidents is that the pedestrian steps out into the highway when his presence has been masked. With the limited facilities for parking there is a problem here, but it is essential that parking on the highway should not be encouraged.

Mr. Hargreaves: Would the Minister not consider that 20 ft. to 25 ft. would be ample distance to give good sight lines?

Mr. Barnes: I agree that it is an issue of controversy whether it should be 20 ft., 25 ft., or 30 ft. The argument appeared to be in favour of a reasonable distance. If we are to define these matters clearly, we ought to give pedestrian and motorist ample opportunity to see each other. But I emphasize that these are not arbitrary matters. They represent decisions at the moment to deal with a very vexed and difficult problem, but we shall build on experience and there will be no particular difficulty in introducing a modification if that is necessary.
I must express my gratitude to all hon. Members for facilitating the passing of these Regulations. The full support I have received from Parliament and organisations throughout the country will enable me and my associates to get the maximum publicity in the Press, and I hope, in broadcasts and in other ways, to emphasize to pedestrians their new rights.

Mr. G. Hutchinson: Is the right hon. Gentleman not going to deal with London?

Mr. Barnes: In view of the contribution we make the necessity to see that there is no repetition of the undue number of crossings and the fact that in London there are a great variety of authorities that could be encouraged to extend these crossings extensively, we must keep London in the same proportion as the rest of the country.

Mr. Janner: Is the right hon. Gentleman considering publicity by means of a short film strip? It is highly important.

Mr. Barnes: The whole matter of publicity will receive special attention.

11.10 p.m.

Mr. William Shepherd: In my view the House should have given more time to the consideration of these Regulations than it is now able to do, and the somewhat vague answer given by the Minister confirms that view. I am not certain how the reduction in the number of these crossings is to be achieved, or how it is to be done in a way which will give safety in many places. I am more concerned with the rights of pedestrians on light-controlled crossings.
The Minister said he was in some legal difficulty: I think the answer he has given has put the pedestrian in some difficulty. I am one who hardly walks anywhere; I travel by car. I am terrified when I cross the road, and I am amazed at the ingenuity and bravery of those who do. I cannot imagine that in this case the right hon. Gentleman has done the right thing by pedestrians, or that the reasons he has given to the House are adequate.
If a pedestrian gets half-way across when the light is in his favour, and it then changes, he has now no legal right on the crossing at all. If he had a legal right he would do one thing—he would go across to the other side. If he has no legal right he may do one of two things—he may try to get back, or he may bolt to the far side in the hope that that is the better thing to do. The Regulations, as they stand, cannot conceivably make the position clearer for either the motorist or the pedestrian. Most motorists, when such a situation occurs, give the pedestrian an opportunity to get across. But these Regulations confuse the issue, and put the unfortunate pedestrian in a most difficult position.
I understand that the Pedestrians' Association is opposing the Regulations. I feel instinctively against anything the Association does, because it tries to introduce a bitter animosity that is better kept out; but I think that in this case the Association is right. Another case where confusion is caused is when traffic is filtering to the right or left. To say that the vehicle should have precedence over the pedestrian when clearly the light is favourable to the pedestrian cannot help road safety.
I am sorry the Regulations have been introduced in this form, and I am convinced that this is a retrograde step. The Minister has indicated that to some extent these are experimental Regulations. I hope that after he has seen the confusion that will arise, as I think, he will lose no time—if he is still Minister of Transport, which we hope he will not be—in bringing in new Regulations to give the pedestrian a sporting chance of existence.

11.15 p.m.

Mr. Pargiter: It is the duty of the pedestrian not to step out into the flow of traffic. Under these Regulations he would have a right to do so, and there might be the possibility of an accident through a vehicle stopping suddenly. It is a question of reasonable interpretation of what a pedestrian may do, and it would probably work out all right. It seems to me that too much emphasis should not be placed on the absolute right of the pedestrian to do something ridiculous, to step on to a crossing and expect every motorist to stop. I hope that this will be covered by an explanation in the Highway Code that the pedestrian has to be reasonable and not expect to exercise this right if there is a flow of traffic passing.

11.16 p.m.

Mr. Maudling: I was rather disappointed about what the Minister had to say about the reduction in the number of crossings. It did not entirely agree with what I have been told about local conditions in my division. There has been considerable concern in Barnet about these Regulations and I have had a letter from the local authority expressing this concern and asking me to raise the matter in the House, if at all possible.
Barnet has a particular problem because the Great North Road, which carries a lot of heavy lorry traffic, passes through a relatively narrow High Street which is used by many pedestrians, especially during shopping hours. There are 14 pedestrian crossings in the whole Barnet Urban District Council area, not by any means an excessive number, and the Council have been instructed to reduce that number to five. They have protested that this is inadequate and they have made the point that up to now they have been moderate in the number of crossings and, therefore, the same pro-


portion should not be applied to them as apply to other authorities who may have adopted a different policy in the past.
The response they have had so far has been disappointing. They have been informed, as have other local authorities. that discussions can take place with the divisional road engineer and proper adjustment can be made. I am informed that the discussions which have taken place so far have been disappointing and that the chances of being able to advance above this arbitrary figure of five are very small. It is my firm belief, and I have had experience of driving in the district, that the reduction will be far too severe.
I know there is the argument that too many crossings can reduce the respect for crossings. Equally, if there are too few, then people do not use them and dart across the road. We must strike a balance. I do not think the Minister should impose an arbitrary figure. I hope he will be able to give us some sort of assurance that greater latitude will be given by the divisional engineers to local authorities.

Mr. Arbuthnot: I should like to ask the right hon. Gentleman exactly how the administrative arrangements decide how many pedestrian crossings there shall be in each area? Has he divided the country into a number of areas and decided that each will have so many crossings? I find it difficult to understand how the reduction is to come about and how the number will be fixed for each area.

Mr. Deputy-Speaker (Major Milner): There does not seem to be anything in the Regulations about the number of crossings. There are certain definitions. it is true, but nothing dealing with the number of crossings.

Viscount Hinchingbrooke: In view of the explanation given by the Minister, I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

WHEAT, NORTHERN IRELAND (PRICES)

11.20 p.m.

Mr. Gage: I beg to move,
That an humble Address be presented to His Majesty, praying that the Order, dated 26th June, 1951, entitled the Wheat (Northern Ireland) Order, 1951 (S.I. 1951, No. 1123), a copy of which was laid before this House on 27th June, be annulled.
This is an Order which is in a fairly common form. It is of a type with which I think most hon. Gentlemen will be fairly familiar. It is a type of order which has been in existence for some time both in Great Britain and in Northern Ireland.
Quite briefly, the main point of it is that growers of wheat can sell only at approved prices to approved buyers, or to seed merchants or to the Port Area Grain Committee. It makes the qualification, however, that growers can keep either two tons or 25 per cent. of their threshed crop, whichever shall be the greater. The most important part of it, from the point of view of this Prayer, is that it also provides that people who grow only two acres of wheat or below shall not be affected by the Order at all.
I should like to make it clear at the outset that we in Northern Ireland recognise that there is a necessity for orders of this kind. In wheat growing parts, while we are dependent upon imported supplies of food and while it is difficult to get because it costs dollars, it is obviously important that there should be some kind of regulation as to the amount of his crop which a farmer can keep for feedingstuffs, and we make no general complaint upon that score.
Our objection to this Order, which applies only to Northern Ireland, is this. Northern Ireland is not a wheat growing part of the world, and my hon. Friend the Member for Armagh (Mr. Harden), who knows very much more about farming than I do and is himself a farmer, tells me that in his county there is practically no wheat at all grown and that you could count the number of farmers who grow wheat on the fingers of one hand. It is, unfortunately, due to our climate that wheat is not a crop that does well, and people try to grow as little of it as possible. It needs a dry climate, and anyone who knows Northern Ireland will


know that we have not got a dry climate and that it is very difficult to grow wheat at all.
I have received some figures, and I should be glad if the Parliamentary Secretary will say whether he agrees with them. According to these figures, in the whole of the Province not more than 2,000 acres of wheat are grown and there are scarcely more than 30 farmers who grow over two acres of wheat in the whole of the Province. The effect of that is as if one were to pass a stringent Order dealing with the growth, production and distribution of bananas in the United Kingdom. It might be an admirable thing in a place where bananas grow, but it would be useless and quite negative in a country where they are not grown. That is almost the position in regard to wheat being grown in Northern Ireland.
I have not the slightest doubt that the Parliamentary Secretary will say that the Government of Northern Ireland have never raised any objection to this Order. I am not surprised that they have not, because I am certain that the Ministry here presents them with a number of clerks and other people to administer this Order and to see that the non-existent wheat is not sold other than as stated in the Order. Who are they to complain if they get a number of clerks, especially if someone else is paying for them? I am certain that their view on the matter is this: "If the Ministry likes to erect this expensive machinery, it is not for us to say 'No'." The Ulster Farmers' Union say, "We have always wondered why we have these orders. We have no surplus of wheat at all. We grow only an acre or so for our own crop, but after all, they have done so many odd things in relation to Ireland that one more will make very little difference."
There is one other problem which this Order illustrates, and it is that of divided control. Some of my hon. Friends from Scotland, who I understand are similarly agitated, might be interested here, although unhappily they seem mostly to be in Scotland tonight. Agriculture is a non-reserved service in Northern Ireland. There is a Ministry of Agriculture, to whom any complaints about this order have been made; and people naturally expect the Ministry of Agriculture to deal with this matter. But they say, "We have

nothing to do with it. It is a Ministry of Food order". Then, if one goes to the Ministry of Food, one is told, "The order must be all right because the Ministry of Agriculture in Northern Ireland have never made any complaint about it." That is a difficulty which we frequently experience in Northern Ireland through the fact that there is division of control. Nobody knows precisely where one Ministry ends and another begins.
I think I have now established, with tolerable certainty—since I see the Parliamentary Secretary here—that this is the responsibility of the Ministry of Food. I hope, therefore, that I may enable them to save a little of the money which they are spending in administering this Order—which they have been doing, I admit,. through my lack of diligence, since 1945. But, because a thing has been wrong from. 1945 to 1950 it does not become right in 1951, and now that the Parliamentary Secretary knows the position, I hope that he will see that this is one of the controls which can be removed. Hon. Members. opposite are fond of saying, "You say we control everything; what controls, would you remove?" Well, Sir, I would start with the control of wheat in Northern Ireland.

Mr. Harden: I beg formally to second the Motion.

11.30 p.m.

The Parliamentary Secretary to the Ministry of Food (Mr. Frederick Willey): The hon. Member for Belfast (Mr. Gage) spoke with his usual brevity and his usual persuasion. I shall try to equal his brevity and exceed his persuasion. I must dash his hopes; he has not persuaded me.
We do not differ about the facts. I agree that just over 2,000 acres are devoted to wheat in Northern Ireland. This is not a substantial difference, but I do not quite agree with him about the other facts. About 15 per cent. of the estimated production of wheat comes under this Order, and our information is, as far as 1950 is concerned—the last year for which we have complete figures—that there were 110 farms with more than two acres given to wheat. I think the hon. Member is right in believing that the figure is now rather less. Our estimate is that it is probably about 50 this year.
The position is that there are admittedly small quantities of wheat coming forward, most of which goes to local millers. The hon. Gentleman accepts, in general, the wheat orders on the grounds, I presume, of the farm price review machinery and the fact that imports of wheat have a heavy dollar content. Conceding that, his idea is, I think, that it is rather ridiculous that the Orders should apply to Northern Ireland. But we have to remember that we are dealing with farmers in the United Kingdom generally. Rightly or wrongly, I believe that the farmers of Great Britain would feel some resentment if the farmers of Northern Ireland were treated differently in this respect.
The farmers of Northern Ireland are treated differently where a case can be made out on the different conditions obtaining in Northern Ireland, with regard to oats, for example. With regard to the operation of the animal feedingstuffs scheme, Northern Ireland is admittedly different. But here, the farmers in Northern Ireland could make out no different case from many small farmers in Great Britain; and Northern Ireland, as an area, could not make out a case different from that of many areas of about equal size in Great Britain.
There are wide stretches of country in Great Britain where there are few farms with any more acres devoted to wheat than in similar areas in Northern Ireland. But we have to regard, for this purpose, the whole of the United Kingdom as a single agricultural economy. We would be in impossible difficulties if we started dividing it up regionally for wheat and the different commodities covered by the price review. We have, in short, to regard the whole of the United Kingdom as a single area for the purpose of price review.
I am sure that the hon. Gentleman has made inquiries in Northern Ireland. I am equally sure that Northern Ireland believes that it has great benefits in being considered in this single agricultural economy.

Mr. Gage: Mr. Gage indicated assent.

Mr. Willey: I am glad to see that the hon. Gentleman agrees. I need take the argument no further. That argument, as

it is conceded, does not mean that we should ignore special conditions where they obtain in Northern Ireland. We recognise that in the oats and animals feedingstuffs schemes.
The hon. Gentleman has anticipated my main reply, because he guessed what I was going to say, namely, that we have to pay regard to the views of the authorities in Northern Ireland. With regard to this Order, we not only consulted the Minister of Agriculture for Northern Ireland, but have his concurrence with it. So, if we regard his evidence as being valuable evidence to which we ought to pay careful attention, we have no evidence that there are special conditions in Northern Ireland so far as wheat is concerned.
Again, as the hon. Gentleman admitted, the National Farmers Union of Northern Ireland has not made representations to us. They do not share his feelings about this. They do not feel that Northern Ireland ought to be separated and treated distinctly from other parts of Great Britain.

Mr. Gage: They do not feel strongly enough about it because practically none of them are affected by it.

Mr. Wiley: Exactly the same could be said about parts of Great Britain. But, if it is conceded that these steps ought to be taken to ensure that we have the greatest possible amount of wheat for human consumption, then these conditions ought to operate for the whole of the agricultural economy upon which we rely for home production. I hope I have not created the impression that we are unsympathetic. In fact, we are alive to this.
Originally, these wheat Orders only provided for the farmers to take 5 per cent. of the "tailings" to feed their own stock. We have gone a long way from there, as the hon. Gentleman pointed out; and this present Order goes some way to meet him because in it we allow, for the first time, that the farmer shall retain 25 per cent. of his thrashed wheat, or two tons. This change is because previously there was an anomaly.
Previously farmers with rather more than two acres found that they could keep for their own livestock less feedingstuff than those with only two acres, but they will, in many cases, now get the benefit of this further concession by being able to


keep two tons—if that be the greater amount. The change should help farmers with rather more than two acres.
I assure the hon. Member that he has not raised this issue in vain; we are alive to the exceptional circumstances in Northern Ireland and, so far as is possible, we shall meet them; and, if he can persuade us that there are other respects in which we can meet the exceptional difficulties of the Northern Ireland farmers, we shall pay every attention to him.

Mr. Gage: I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

BRITISH IMMIGRATION POLICY

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Royle]

11.38 p.m.

Mr. Wedgwood Benn: The subject I wish to raise this evening is the question of British immigration policy. Perhaps I may begin with a personal case which came to my notice, as a result of which I have given some thought to the Government's attitude to immigration. This case has nothing extraordinary about it, for it is concerned with a Greek family in Alexandria. One son of that family came to live in our country, was naturalised, and is a constituent of mine. A daughter married and went to live in South Africa, and another son remained with his mother in Alexandria. Six months ago she left to live with her daughter, and the boy was there alone.
The matter came before my notice when my constituent told me that his brother would like to come here to live, but was refused permission by the Home Office. My constituent then asked my help, and I communicated with my hon. Friend's Department. I received a reply in a letter concerned with the policy of the Government, and I should like to read extracts from that letter to the House.
So many foreigners want to live here with relatives and friends that we can only take those who are in distressed circumstances and need the care of a relative here. Mr. Stavrou"—
that is the name of my constituent's family—

is apparently a young man who is settled in Egypt and able to stand on his own feet. I am afraid he does not appear to come within the scope of our policy.
I wrote again to the Home Office, and my hon. Friend replied:
We could allow him to come only if he was able to obtain a job here, for which the Ministry of Labour could issue a permit…we cannot let him come and look for work.
I quote this because, as I have said, I am concerned here with an ordinary case.
This man wants, for a very understandable reason, to come here to be with his brother. He speaks and writes English, so far as I know, and has a job at the present time; and whatever skill he has would enable him to get a job in this country. The request is supported by my constituent's local vicar, who is extremely respectable—in fact, the whole case is very respectable. The reason that this case interests me and should, I believe, interest the House is that it throws some light on British immigration policy. When I put down a Question to my right hon. Friend the Secretary of State for the Home Department about British immigration policy on 20th June, the reply was framed in similar terms to the letter I quoted. In it was this passage:
…there are no formal rules governing the admission of foreigners, who may wish to reside here, and applications are dealt with on their merits in the light of the general principles which I have announced to the House from time to time."—[OFFICIAL REPORT, 20th June, 1951; Vol. 489, c. 63.]
The legislation which governs the present British immigration policy is contained in one or two Acts of Parliament. The first—under emergency powers—is the Aliens Restriction Act, 1914, and then we have the Aliens Restriction Act, 1919, which were designed in time of national emergency to give the Government the power to control immigration and the movement of aliens in this country, those wishing to enter this country, and so on. The first Act was passed on 5th August, 1914, and was specifically designed to deal with an emergency situation. It was consolidated in 1919 as part of a permanent programme of immigration and alien control.
I believe it is the history of the way that control was made permanent which gives us a clue as to what is wrong with British immigration policy at the present


time, and that is, that it is essentially a restrictive policy. That is not such a revolutionary statement as it may sound. It is possible to argue that our immigration policy at present tends to restrict immigration rather than to control it positively in a satisfactory way, and that there is nothing basically wrong with it from the point of view of legislation. I know that an hon. Member on the Adjournment may not propose legislation; but legislation is not in any case necessary to achieve the purpose I have in mind.
The Aliens Restriction Act, 1919, gave the power for Orders-in-Council to be made. The King made the main Order-in-Council, the Aliens Order, 1920, and under that Order complete power is given to my right hon. Friend to make all the regulations necessary for immigration. The Aliens Order, 1920, sets out certain categories of aliens who are completely excluded, such as those, for example, who are unable to support themselves, those without a labour permit, lunatics, idiots, those mentally deficient, undesirable people, and those found guilty of extraditable crimes. At the same time, this Order gave the Home Secretary absolute power to exempt any person or class of persons unconditionally or subject to his conditions. So the Secretary of State could admit lunatics, idiots, mentally deficient persons, or even those, as far as I understand it in reading this Order, who are guilty of extraditable crimes.
The machinery is available if we care to use it in a proper way, and it is quite feasible for the Secretary of State to make orders governing immigration policy if he chooses which would alter the basis of the policy pursued at present. I take this opportunity of congratulating the Home Secretary on the very generous policy that he has pursued. I do not want to be ungrateful or ungracious in my reference to his powers. He has been very generous to distressed persons abroad who wish to come to this country.
On 13th November, 1945, my right hon. Friend announced in the House a policy of controlled immigration for distressed people which has, no doubt, been a source of great relief and satisfaction to many people who would otherwise not be able to come to this country. Since

the war something in the neighbourhood of 200,000 persons have come in under this provision. I do not think it would be permissible to pass over this section of the Secretary of State's powers without saying how generous he has been.
At the same time, the very flexibility of these provisions means also that there are inherent disadvantages in them. There is no queue of people wishing to immigrate to this country. If a man wants to come here he has to show that he is in a specially skilled category in order to obtain a Ministry of Labour permit, or that he is a distressed person, or that he has some close relative. This restrictive approach has governed the whole of our policy up to the present time.
I think that there should be a more positive approach, and that basically we should accept the right of everyone to come in, and then make our exclusion orders and so on. Although this would seem to make a terrific difference, I do not think so, except that we would recognise the right of people, who want to, to come in, whether for a good reason or not. There ought to be the right for these people to find themselves in some sort of queue where others were in the same position as themselves.
The Home Secretary said in the letter I quoted that there were very many foreigners who wanted to live here. I put down a Question on 20th June to the Home Secretary asking him how many applications for permission to enter this country for permanent residence were received from non-British nationals in the years 1945–50; how many were refused, and under what headings the grounds for refusal could be grouped. In his reply, the Home Secretary said that no record was kept of the numbers of applications and refusals for permission to enter the country, and that he did not think that the labour involved in keeping such a record would be justified.
At any rate, however right the Home Secretary may be when he says that so many foreigners want to live here, his Department is unable to produce any statistics. In view of the large number of people who want to live here, it would be interesting to know how many people we would be prepared to accept. Up to this point I have been trying to show the way in which our policy is executed, and to show the advantages and disadvantages behind it.
Basically, I feel that the problem is not a moral one. It is one on which we react instinctively. With inherited liberal principles, I feel that the free movement of all people is a good thing and one to be encouraged, and I am sorry to see the Liberal bench, normally so crowded, so empty tonight. The Declaration of Human Rights has for one of its Articles the right of the human being to take a nationality, to change it, and not to be denied the right arbitrarily to change it. I realise it is not as easy as that, but most of the difficulties are definable difficulties based on facts and situations which the economic planners now available to Government Departments should be able to grasp and measure. I believe that the basic problem which prevents more immigration is an economic one.
Immigration and alien-entry restriction is basically the same sort of restriction as tariffs and duties, which are to prevent unfair competition from abroad. In this case, it is unfair competition from aliens coming to this country who might not be able to organise themselves adequately in unions and who might undercut the worker at home. That sort of economic difficulty can be measured year by year. Between the wars, when there was a great deal of unemployment, it was an acute problem.
At present, when unemployment is 1 per cent. in the country as a whole and there are 500,000 unfilled vacancies, it is no problem at all. It is the reverse. It might well be that Mr. Stavrou, if he were able to come to this country, might be able to fill one of those vacancies. At any rate, the economic problem now works the other way and tends to make us believe that immigration should be encouraged.
We have to have as a basis of our annual immigration policy some sort of quantitative calculation. As a rough estimate, one might work out some relationship between the number of unemployed and the number of unfilled vacancies and relate that to the number of people who emigrate in the course of the year. I do not want to appear to be making this too simple. But in 1949, for example, 145,000 people emigrated from this country and only 60,000 immigrated into this country. That situation does reveal some ground for manœuvre with our immigration policy.

If we relate it to the current employment situation we can get some sort of a basis.
Having got the overall total—this is where the positive approach comes in—the question is how we should allocate that total among the people who want to come in. American immigration experience is something that we might well study. They have their list of exclusions—idiots, paupers, alcoholics, people guilty of misdemeanour involving moral turpitude—whatever that may be—and political anarchists who advocate the overthrow of the Government of the United States by force. And here I must say that I often wonder how George Washington himself would have got into the United States before the Revolutionary War if he had been obliged to say that he was not advocating the overthrow of the Government of the day.
At any rate, there are the normal exclusion provisions in the American immigration laws, and their basic method of calculating residual immigration is by the quota. The quota is based on the number of foreign-born residents in the United States at a certain date. A given proportion are admitted every year. For example, 60,000 British may be admitted every year, 20,000 Germans and 100 Indians. That does enable one to know where you stand. So far as American immigration is concerned, if you are not in one of the excluded categories, you or your wife may qualify for the quota. If you want to go there you can get on the list, and ultimately get in—leaving aside political considerations, which I do not want to enter into.
It is a rigid system, and has all the disadvantages of rigidity. Recently a special Act was passed by Congress to admit a British woman who had got tuberculosis while in this country and was returning to join her husband. That was a very generous action, but it is a weakness of the rigid system that the Secretary of State has not the same power there that the Secretary of State has in this country.
At the same time, there is a nearer approach to the ideal of universal admission in the United States than there is here. I think we could learn something from that, and that we might change the interpretation of the Aliens Order. If we were to work out some form of migration policy based on these lines we


would be doing some service to that free movement of populations which is a vital prerequisite to understanding in all parts of the world.

11.56 p.m.

The Under-Secretary of State for the Home Department (Mr. Geoffrey de Freitas): I am grateful to my hon. Friend for informing me of the particular case he was going to raise, and we are all grateful to him for his interesting speech, based on his fundamental belief in the liberal principle he enunciated.
I should like first to examine the working of a quantitative system, somewhat on the lines of the United States, of controlling immigration, and to submit that it is not suitable to conditions in this country and is actually against the interests of certain foreigners, refugees and distressed people, whom we most want to help. It is unsuitable to conditions in this country because we are not a country of immigration like the United States; we cannot plan over a long period to absorb a constant stream of immigrants and reckon on the need for more.
We are a small island with a large population and highly developed industrial life. It is not as if there was a vast exodus from this country of people migrating abroad. In fact, a most interesting result of the last census is that for the first time for a century in the inter-censual period there was actually an increase in population in England and Wales by migration. If there were a great exodus of people it might be argued that with a population of 50 millions we could easily absorb to our mutual benefit large numbers of European immigrants.
It is also against the interests of certain foreigners that we most want to help. Unless the immigration quota was fixed at a very high figure, say in relation to the number of unemployed or the number of people leaving the country, any pressure for admission caused by distress or persecution in the outside world must either be ignored, or met by amending legislation, which is often slow and might well be controversial. For instance, in the United States, where they have strict laws on this subject, they have had difficulties from time to time and it has been necessary to pass laws such as the War Fiancées Act and the Displaced Persons Act, 1948.

I come to the point my hon. Friend made about not being convinced of the advantages of the wide powers of the Secretary of State to vary the conditions of entry. I submit that there are real advantages in having our present flexible machinery. First, policy can be modified quickly to meet circumstances as they change, not only at home but abroad. Second, special consideration can be given to exceptional cases.
Our broad general policy since the war has been, first, to admit immigrants who can make a positive contribution to the national economy, and, secondly, to help as much as we can to relieve distress and persecution abroad. That is why my hon. Friend was quite right in using the case of his constituent's brother as typical. Speaking from memory, in the first of the two letters I wrote to him I said I was afraid he could not come here because he did not come into the category of a distressed person, and in the second I told him he could only come here if he got a job sanctioned by the Ministry of Labour.
The figures of immigrants since the war which my hon. Friend quoted are substantially correct. One hundred and twenty thousand Poles and their dependents of the Polish Resettlement Corps have entered this country; 25,000 former prisoners of war, and 94,000 refugees and distressed persons have also come. All but a small proportion have been men and women who could make a direct contribution to our national economy. Then there is the other point. that we have followed our traditional policy of taking in a certain number of refugees and people distressed.
In regard to the first category, if a foreigner is willing to take a job and the Ministry of Labour advises us it is in the national interest that that job should be filled by him and he undertakes to remain in it for the first years of his stay, we allow him to come in, and, in fact, welcome him. Thirty-five thousand have come in every year since the war in that way. We do not allow a foreigner to come here to look for a job, and I think, that is a reasonable safeguard. It is true that at times it may seem we are unnecessarily restrictive, but when we have a system so carefully set up as this, I think on the whole it is justified.
We welcome a foreigner whose employment is approved. For instance, in Italy at this moment we have a selection team choosing Italian workers to work in our mines and on the land. We want not only workers. If a foreigner wants to come here and set up a business and the Home Office are advised by the Government Department most closely concerned that it is in the interest of the national economy that he should come in, and there is no disadvantage about his coming in, then we admit him.
In regard to the second category, we have consistently followed our traditional policy of relieving the victims of persecution abroad. From time to time the Home Secretary admits certain categories of distressed people and refugees. The fact is that our system of admission. based on discretion and not restriction, enables us—and I speak for the senior officials, the Home Secretary and myself—to give particular care and consideration to the distressing cases, especially cases of elderly people who are living abroad in ill health and alone, who have

relatives in this country willing to look after them. The very fact of the flexibility and the wide discretion which we have in our system brings great benefit to those people.
I believe that our system is good and fair. Taking into account the fact that we are a small, highly industrialised country which has great attractions to many millions of other people in other countries where there is unemployment, poverty, persecution and lawlessness, the fact that we are the Mother Country of a vast Commonwealth and Empire, standing in close relationship with their citizens, and the fact that we have a high standard of administration in our Departments which have the discretion—that is to say, a great Department of State like the Home Office—I submit that our system is one which works well and that, on the whole, our policy is sound.

Question put, and agreed to.

Adjourned accordingly at Two Minutes past Twelve o'Clock.